Handbook for NSDL Depository Operations Module Services.pdf · Depository Receipt 6. Clearing...

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Handbook for NSDL Depository Operations Module Core Services National Securities Depository Limited

Transcript of Handbook for NSDL Depository Operations Module Services.pdf · Depository Receipt 6. Clearing...

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Handbook for NSDLDepository Operations Module

Core Services

National Securities Depository Limited

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CONTENTS

Volume 3

Core Services

Chapter 1 - 2 : Volume 1

Chapter 3 - 7 : Volume 2

Chapter 8 : Account Opening .............................................................................. 1

Chapter 9 : Transmission and Nomination ........................................................ 33

Chapter 10 : Dematerialisation ............................................................................. 49

Chapter 11 : Trading and Settlement ................................................................... 70

Chapter 12 - 20 : Volume 4

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Types of Accounts

Beneficial Owner

Account

Clearing Member

Account

House Non-House

Intermediary

Account

Account Opening 1

CHAPTER 8

Account Opening

Any investor who wishes to avail depository services must first open an account with a depositoryparticipant of NSDL. The process of opening a demat account is very similar to a bank account.The investor can open an account with any depository participant of NSDL. An investor mayopen an account with several DPs or he may open several accounts with a single DP. Thereare several DPs offering various depository-related services. Each DP is free to fix its own feestructure. Investors have the freedom to choose a DP based on criteria like convenience, comfort,service levels, safety, reputation and charges. After exercising this choice, the investor has toenter into an agreement with the DP. The form and contents of this agreement are specified bythe Business Rules of NSDL. In this chapter we deal with the procedure for account openingunder the NSDL system.

Types of Accounts

Type of depository account depends on the operations to be performed. There are three typesof demat accounts which can be opened with a depository participant viz. (a) Beneficiary Account(b) Clearing Member Account and (c) Intermediary Account.

Figure 6

� A DP may be required to open three categories of accounts for clients - Beneficiary Account,Clearing Member Account and Intermediary Account.

� A Beneficiary Account is an ownership account. The holder/s of securities in this type of accountown those securities.

� The Clearing Member Account and Intermediary Account are transitory accounts. The securitiesin these accounts are held for a commercial purpose only.

� A Clearing Member Account is opened by a broker or a Clearing Member for the purpose ofsettlement of trades.

� An Intermediary Account can opened by a SEBI registered intermediary for the purpose of stocklending and borrowing.

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Account Opening 2

Beneficiary Account

This is an account opened by investors to hold their securities in dematerialised form with a

depository and to carry out the transactions of sale and purchase of such securities in book-

entry form through the depository system. A beneficiary account holder is legally entitled for all

rights and liabilities attached to the securities (i.e. equity shares, debentures, government

securities, etc.) held in that account. Therefore, the account is called "beneficial owner account".

A beneficiary account can be in the name of an individual, corporate, Hindu Undivided Family

(HUF), minor, bank, financial institution, trust, etc. or the broker himself for the purpose of his

personal investments in demat form. The account is opened with a DP.

House account vs. non-house account - An account opened by a DP for the custody of and

transactions in its own investments is referred to as a house account, and all other beneficiary

accounts are referred to as non-house account. DPs are required to open house accounts for

their own investments to prevent co-mingling of their assets with that of their clients.

Neither the Depositories Act nor the regulations made under the Act lay down any specifications

about who can open a beneficiary account. Since all beneficial owners are deemed to be

members of a company (under section 41(3) of the Companies Act), only those who are eligible

to become members of a company under the Companies Act, can open a beneficiary account

with a depository. Thus, all legal entities with the exception of partnership firms can open an

account in the depository system.

Documents for Verification

I. Non-body Corporate Investors : For the purpose of verification, all non-body corporate

investors have to submit the following documents, as prescribed by SEBI, alongwith the

stipulated account opening form.

A beneficiary account must be opened only after obtaining a proof of identity and address of the

applicant. An authorised official of the Participant should verify the photocopies of any of following

documents submitted with their corresponding originals and put his/her signature on them with

remarks "verified with original" before proceeding to open the account.

(a) Proof of Identity (POI)-

I. Passport

II. Voter ID Card

III. Driving license

IV. PAN card with photograph

V. MAPIN card

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Account Opening 3

VI. Identity card/document with applicant's Photo, issued by

a) Central/State Government and its Departments,

b) Statutory/Regulatory Authorities,

c) Public Sector Undertakings,

d) Scheduled Commercial Banks,

e) Public Financial Institutions,

f) Colleges affiliated to Universities (this can be treated as valid only till the

time the applicant is a student),

g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their

Members; and

h) Credit cards/Debit cards issued by Banks.

(b) Proof of address (POA) -

I. Ration card

II. Passport

III. Voter ID Card

IV. Driving license

V. Bank passbook

VI. Verified copies of

a) Electricity bills (not more than two months old),

b) Residence Telephone bills (not more than two months old) and

c) Leave and License Agreement / Agreement for sale.

VII. Self-declaration by High Court & Supreme Court judges, giving the new address

in respect of their own accounts.

VIII. Identity card/document with address, issued by

a) Central/State Government and its Departments,

b) Statutory/Regulatory Authorities,

c) Public Sector Undertakings,

d) Scheduled Commercial Banks,

e) Public Financial Institutions,

f) Colleges affiliated to Universities (this can be treated as valid only till the time

the applicant is a student) and

g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.

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In case of joint holdings, POI and POA documents must be collected in respect of all

account holders.

The aforesaid documents are the minimum requirement for opening a BO Account.

Participants are advised to exercise due diligence while establishing the identity of the

person to ensure the safety and integrity of the depository system. Participants can apply

stricter criteria and accordingly, decide to accept, select documents out of the list of

documents prescribed by SEBI, as proof of identity/address.

II. For Corporate Investors : For the purpose of verification, all corporate investors have to

submit the following documents as prescribed by SEBI alongwith the stipulated account

opening form.

(1) Memorandum & Articles of Association (MOA & AOA), Board resolution for opening demat

account and the list of authorised signatories alongwith their specimen signatures and

photographs, etc.

(2) Introduction by an existing account holder or by the applicant's bank.

(3) Proof of address of the corporate, evidenced by the document registered with Registrar of

Companies or acknowledged copy of Income Tax Return or Bank Statement or Leave and

License Agreement/Agreement for sale.

An authorised official of the Participant shall verify the proof of address with the original

documents and affix his/her signature on the documents submitted by the Client, while exercising

such due diligence.

Common Information

The process of opening an account with a depository, nature of such an account, and variousfactors to be considered for opening a depository account are explained below. Some detailsare common to all types of accounts. These are:

1. Name of the holder

2. Date of birth (for individual accounts)

3. Occupation

4. Address & phone/fax number

5. Bank details like name of bank, type of account (current/savings), account number, branchaddress, MICR, etc.

6. PAN number, if applicable

7. Details of nomination (for individual accounts only)

8. Specimen signatures

Account Opening 4

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9. MAPIN UIN (s)

10. E-mail address

11. Mobile number

12. Address for communication

Beneficiary Account - Procedure for Opening an Account

Investors have the choice of selecting a DP based on their convenience, comfort, service levels,

safety, reputation, charges, etc. They have the flexibility to have more than one account with

the same DP or any other DPs. No minimum balance is required for opening a depository

account. Investors also have the freedom to close an account with one DP and open another

one with any other DP.

The type of the account opening form to be filled by an investor and the list of documents

required depend on the type of beneficiary account to be opened - whether it is for NRIs or

corporates or individual. Further, the individual account can be in a single name or joint names.

Clearing Members and brokers have to open a beneficiary account if they have to deal with

their own holdings.

There are several client types in the depository system and different codes are allotted to them.

These are listed below :

1. Resident

� Ordinary

� Hindu Undivided Family (HUF)

2. Financial Institutions (FI)

� Government-sponsored FI

� State Financial Corporation

� Others

3. Foreign Institutional Investors (FIIs)

� Mauritius-based

� Others

4. Non-resident Indian (NRI)

� Repatriable

� Non-Repatriable

� Depository Receipt

Account Opening 5

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Account Opening 6

5. Body Corporate

� Domestic Company

� Overseas Corporate Body (OCB)

� Government Company

� Central Government

� State Government

� Co-operative Body

� Non-Banking Finance Companies (NBFC)

� Non-NBFC

� Broker

� Foreign Bodies

� Group Companies

� Others

� Depository Receipt

6. Clearing Member (CM)

7. Foreign National - Foreign National / Depository Receipt

8. Mutual Fund - Depository Receipt

9. Trust

10. Bank

� Foreign Bank

� Co-operative bank

� Nationalised Bank

� Others

11. Intermediary

Client-Participant Agreement – Anyone intending to avail depository services should

enter into an agreement with a DP. The standard agreement is approved by SEBI and forms a

part of NSDL Bye-Laws. This agreement sets out in contractual form the nature of services to

be provided, rights and obligations of both the DP as well as the client, and the fees/charges

payable for the services.

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Figure 8

DP- Client Agreement

This agreement has to be made on non-judicial stamp paper of appropriate denomination and

should be signed by:

(a) the depository participant, itself or through an authorised signatory; and

(b) the sole holder in case of single holding; or

(c) all the joint holders in case of joint holding, or

(d) the constituted attorney in the case of NRI/corporate/trust accounts.

A copy of the duly executed agreement has to be given to the client.

FII clients, registered with SEBI and who have entered into an agreement with the DP directly

or through their constituted attorney under regulation 16(1) of SEBI (Foreign Institutional

Investors) Regulations 1995, need not execute this standard agreement. The FII-DP agreement

authorises the DP to act on behalf of the FII for availing depository services and it should have

been filed with SEBI.

Types of Application Forms

For each kind of account, there is a different application form. A DP must understand clearly the

differences in the application forms, to facilitate efficient and error-free service to investors.

Separate forms are prescribed for individuals (including HUF) and corporate clients/clearing

member accounts.

• DP - Client agreement provides for

– DP Charges

• to be specified in Schedule A of agreement

• DP may revise with minimum 30 days notice

– Movement of securities from the account only on the basis of proper

authorisation from client

– Transaction statement

– Both parties have the right to terminate agreement

– DP to resolve grievance within 30 days

• In case the client defaults in payment of charges, DP may charge a maximum

interest of 24% p.a.

Account Opening 7

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Mobile No.

E-mail ID:

SMS facility Yes No.

MAPIN ID:

Mobile No.

E-mail ID:

SMS facility Yes No.

MAPIN ID:

I/We request you to open a depository account in my/our name as per the following details:(Please fill all the details in CAPITAL LETTERS only)

Type of Account

Ordinary Resident NRI-RepatriableHUF NRI-Non-RepatriableOthers (please specify)

Sole/First Holder’s Details

Name (Mr./Ms.)

Name of Father/Husband

Local / PermanentAddress Pin Code

CorrespondenceAddress Pin Code

Telephone No.

Fax Number

Occupation

Other Holder Details

Second HolderName (Mr./Ms.)

Name of Father/Husband

Address

Pin Code

Telephone No.

Fax Number

Occupation

Mobile No.

E-mail ID:

SMS facility Yes No.

MAPIN ID:

Third HolderName (Mr./Ms.)

Name of Father/Husband

Address

Pin Code

Telephone No.

Fax Number

Occupation

1. Forms for Individual Accounts:

Figure 7 - Annexure J of NSDL Business Rules

Participant Name, Address & DP Id(Pre-printed)

APPLICATION FOR OPENING AN ACCOUNT(For Individuals Only)

Date : Client -Id(To be filled by Participant)

Account Opening 8

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Address for communication /Corporate Benefits (Defaultoption is Local Address)

Local / Permanant Address

Correspondence Address / Foreign Address

Guardian Details (In case the Sole Holder is a minor)

Name (Mr./Ms.)

Relationship (if any)

Address

Pin Code

Date of Birth (of minor)

D D M M Y Y Y Y

In Case of NRIs

Foreign Address

RBI Reference No. RBI Approval Date

D D M M Y Y Y Y

Bank Details

Bank Sub-type Savings Account Current Account

Bank Account No.

Bank Name

Branch Address

Pin Code

9-Digit Code Number of the Bank and branchappearing on the MICR cheque issued by the Bank

Financial Details

P.A.N. IT Circle / Ward / District No.

Sole/First Holder

Second Holder

Third Holder

Guardian(In case of minor)

Standing Instructions

I/We authorise you to receive credits automatically into Yes Nomy/our account.

Account to be operated through Power of Attorney (PoA) Yes No

Account Opening 9

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Account Opening 10

Signature acrossPhotograph

Signature acrossPhotograph

Signature acrossPhotograph

Please attach recent passport size photographs in the space provided below:

Sole/First Holder Second Holder Third Holder

DeclarationThe rules and regulations of the Depository and Depository Participants pertaining to an account whichare in force now have been read by me/us and I/we have understood the same and I/we agree to abideby and to be bound by the rules as are in force from time to time for such accounts. I/We also declarethat the particulars given by me/us are true to the best of my/our knowledge as on the date of makingsuch application. I/We further agree that any false / misleading information given by me or suppressionof any material fact will render my account liable for termination and further action.

Name(s) of holder(s) Signature(s)

Sole/First Holder(Mr./Ms.)

Second Holder(Mr./Ms.)

Third Holder(Mr./Ms.)

Guardian (in case ofminor)(Mr./Ms.)

NOMINATION

I/We wish to make a nomination and do hereby nominate the following person in whom all rights and/ or amount payable in respect of securities held in the Depository by me / us in the said beneficiaryowner account shall vest in the event of my / our death.

Name of the Nominee (Mr./Ms.)

Relationship with theApplicant (if any)

Address of Nominee

Date of Birth(in case of minor)

Name of Guardian (Mr./Ms.)(in case Nominee is a minor)

Address of Guardian

Signature of Guardian

Pin Code

Pin Code

Signature ofNomineeD D M M Y Y Y Y

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Account Opening 11

PhotographofGuardian

(in case of minor)

Signature ofGuardian across

Photograph

PhotographofNominee

Signature ofNominee across

Photograph

Signature of two Witnesses

Name Address Signature with date

1.

2.

(To be signed by the applicant only in case of nomination)

(Sole/First Holder) (Second Holder) (Third Holder)

Notes :

1. All communication shall be sent at the adress of the Sole/First holder only.

2. Thumb impressions and signatures other than English or Hindi or any of the other language notcontained in the 8th Schedule of the Constitution of India must be attested by a Magistrate or aNotary Public or a Special Executive Magistrate.

3. As per NSDL Circular No. NSDL/PI/2004/1622 dated dated September 7, 2004 pursuant to SEBICircular No. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 a copy of any one of the followingdocuments may be accepted as proof of identity / proof of address (local/correspondence/foreignaddress as the case may be):

Proof of Identity: Passport, Voter ID Card, Driving license, PAN card with photograph, MAPINcard, Identity card/document with applicant's Photo, issued by a) Central/State Government and itsDepartments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) ScheduledCommercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities, g) ProfessionalBodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and h) Credit cards/Debitcards issued by Banks.

Proof of Address: Ration card, Passport, Voter ID Card, Driving license, Bank passbook, verifiedcopies of Electricity bills (not more than two months old)/ Residence Telephone bills (not more than

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Account Opening 12

two months old)/ Leave and License agreement / Agreement for sale, Self-declaration by High Court& Supreme Court judges, giving the new address in respect of their own accounts, Identity card/document with address, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) PublicFinancial Institutions, f) Colleges affiliated to universities; and g) Professional Bodies such as ICAI,ICWAI, Bar Council etc., to their Members.

Participants must verify the copy of the document with the original.

4. Instructions related to nomination, are as below:

I. The nomination can be made only by individuals holding beneficiary owner accounts on theirown behalf singly or jointly. Non- individuals including society, trust, body corporate, partnershipfirm, karta of Hindu Undivided Family, holder of power of attorney cannot nominate. If the accountis held jointly all joint holders will sign the nomination form.

II. A minor can be nominated. In that event, the name and address of the Guardian of the minornominee shall be provided by the beneficial owner.

III. The Nominee shall not be a trust, society, body corporate, partnership firm, karta of HinduUndivided Family or a power of Attorney holder. A non-resident Indian can be a Nominee,subject to the exchange controls in force, from time to time.

IV. Nomination in respect of the beneficiary owner account stands rescinded upon closure of thebeneficiary owner account. Similarly, the nomination in respect of the securities shall standterminated upon transfer of the securities.

V. Transfer of securities in favour of a Nominee shall be valid discharge by the depository againstthe legal heir.

VI. The cancellation of nomination can be made by individuals only holding beneficiary owneraccounts on their own behalf singly or jointly by the same persons who made the originalnomination. Non- individuals including society, trust, body corporate, partnership firm, karta ofHindu Undivided Family, holder of power of attorney cannot cancel the nomination. If thebeneficiary owner account is held jointly, all joint holders will sign the cancellation form.

VII. On cancellation of the nomination, the nomination shall stand rescinded and the depositoryshall not be under any obligation to transfer the securities in favour of the Nominee.

5. Strike off whichever is not applicable.

==============================================================================

AcknowledgementParticipant Name, Address & DP Id

Accepted/Rejected the application from Mr/Ms as the sole/first holderalongwith and as the second andthird holders respectively for opening of a depository account. Your Client Id will be intimated to youshortly. Please quote the DP Id & Client Id allotted to you in all your future correspondence.

Date : Participant Stamp & Signature

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Account Opening 13

The forms prescribed by NSDL require the applicants to give the following details:

(a) Name(s) of account holder(s) - The participant should ensure that the name is identical to

that which appears on the certificate(s) to be dematerialised. In the case of a joint account,

the names of the holders should be in the same order as appearing in the share certificate to

be dematerialised. Investors are advised to open their account in their fully expanded name,

i.e., to spell to the first name as well as the middle name. This would obviate any doubts about

the veracity of the information. Investors can dematerialise all physical securities held in his

full name, abridged name, name with initials or any other fashion in this account. By opening

the account in the fullest/expanded name, chances of wrong credits/debits and rejection of

demat requests are minimised. For example, there may be two investors with the same initials

and same last name - A K Khanna may be either Arun Kumar Khanna or Ashok Kishore

Khanna. If the name is fully spelt out there is no ambiguity and there is no need then for the

DP to take steps to verify the identity. Similarly, investor can dematerialise shares held in any

form of name like A.K. Khanna, Arun K. Khanna, A. Kumar Khanna, Arun Kumar K., etc., into

one account.

(b) Mailing and communication address(es) - The veracity of the applicant’s address is

determined through the documents submitted for verification like verified copies of Ration

card, Passport, Voter ID card, Driving license, Bank passbook, Electricity bills (not more than

two months old), Residence Telephone bills (not more than two months old), Leave and License

Agreement / Agreement for sale, Self-declaration by High Court & Supreme Court judges,

giving the new address in respect of their own accounts. Identity card/document with address,

issued by Central/State Government and its Departments, Statutory/Regulatory Authorities,

Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions,

Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is

a student) and Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.

For NRI accounts, proof is required for both addresses - that of the account holder as well as

the constituted attorney. For corporate accounts, a copy of Memorandum of Association,

Articles of Association, Board resolution permitting opening of account, the registered address

of the Company as well as addresses of the person(s) authorised to operate the account on

behalf of the Company have to be furnished.

(c) Details of guardian in case account holder is a minor - Only a guardian can open a

depository account for a minor. The guardian remains the beneficial owner in the records of

the depository for the securities held on behalf of the minor till he becomes a major. The

guardian is required to sign the application form and details of his name and address need to

be given in addition to the details of the minor.

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Account Opening 14

(d) Foreign address and RBI approval details for NRI, FII or OCB accounts - For foreign-

based clients like NRIs, Flls, OCBs, etc., the DP must obtain original or attested copies of the

power of attorney and the approval letter from RBI permitting them to invest. If the account

holder is an FII or an OCB, SEBI registration details along with attested copy of registration

certificate issued by SEBI and authorisation letter is required.

(e) Clearing member details for a clearing account - A broker account as a clearing account

can be opened only after the depository approves it and allots a clearing-member business-

partner identification number (CM-BP-ID). A broker member can have only one clearing

account per stock exchange of which he is a member. The DP should obtain, with the account

opening form, the necessary details from the clearing member along with a letter from the

Clearing Corporation allotting a CC-CM-ID. In case the clearing member account is being

transferred from any other DP, a no-objection certificate from the earlier DP is also required.

(f) Details of bank account - Details of bank account of the account holder, including the 9-digit

code number of the bank and branch appearing on the MICR cheques issued by the bank

have to be filled in the application form. Companies use this information for printing them on

dividend/interest warrants, etc.

(g) Details of Income-tax Permanent Account Number (PAN) or GIR No. - In case the account

holder is not an income-tax assessee, or he has not yet been allotted a PAN or GIR No., the

DP must obtain a declaration to this effect from the account holder. In other cases, a photocopy

of PAN card or the acknowledgement of latest income-tax returns is required.

(h) Nomination declaration - A beneficial owner can make a nomination of his account in favour

of any person by filing the nomination form with his DP. Such nomination is considered to be

conclusive evidence of the account holder(s) disposition in respect of all the securities in the

account for which the nomination is made. The nomination form submitted should be in the

format prescribed by NSDL in its Bye-Laws and Business Rules.

(i) Details of introducer - If an existing client has introduced a new client to the DP his signature

is required on the form. In other cases, the DP may ask for details that he considers appropriate.

For example, the DP may require the application form to be attested by the bankers, or employer

of the client.

Supporting Documents – As mentioned earlier, supporting documents, required to be submitted

with the account opening form, include

1. photograph of account holder(s)/authorised-holders/constituent attorney, etc,

2. proof of incorporation for companies, e.g., certified copies of the memorandum of

association, trust deed, etc.,

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Account Opening 15

3. certified copy of the document authorising the specified person(s) to operate the account,

e.g., a copy of the board resolution etc.,

4. any other document the DP may consider necessary to establish the genuineness of the

account holder(s).

2. Forms for Joint Accounts - A depository account may be opened and maintained in the

names of more than one person. All the joint-holders have to sign the application form and the

agreement. The supporting documents and photograph should also be provided for all joint

holders. The account opening module of NSDL system provides only for (up to) three joint

names as at present.2 Though the beneficial ownership of jointly held securities vests in all joint

holders, communications about the joint depository account are provided only to the first holder.

The dividend and interest warrants, annual reports and notices for meetings are also issued to

the first-named joint holder only.

In the event of the death of a joint holder, the balance lying in the account can be transmitted,

on request of the surviving holders, to a new account to be opened by the surviving holders.

The earlier account having the deceased holder's name is closed after such transmission. The

chapter 9 on Transmission gives the detailed procedure to give effect to this type of request.

Transposition - The process of effecting changes in the order of joint names appearing on a

security certificate is called Transposition. Joint holders can request a company to transpose

names by way of letter and it does not require affixing stamp duty. If the joint holders do not

want to open separate accounts, they can have the sequence of names on the certificates to

tally with the sequence of names in which depository account is opened.

2 NSDL has prescribed the following special procedure for handling of cases of four or more joint holders:(a) A separate account could be opened in the name of the joint holders with four or more names.(b) No standing instructions to receive credits, receipt instructions, new issue applications and any other instruction

which has the effect of crediting this account should be accepted in respect of such account.(c) Appropriate annexure should be attached to the account opening form to include various details, viz., name, address,

signatures, etc. of more than three holders.(d) An undertaking should be obtained from the client that he will not use this account for the purpose of allotments in the

primary market or for purchases from the secondary market. Hence the client will give no instructions (other than fordematerialisation, bonus, rights and preferential offer) to any person which has the effect of crediting this account.

(e) While opening the account, the DP should capture the names of the four or more joint holders by numbering them inDPM and entering the first holder's name in the first holder's field. The rest of the names have to be accommodatedin the fields for the third holder.

(f) The DP should process the dematerialisation request as per the usual procedure while ensuring that the pattern ofholding for each certificate tallies with the pattern of holding of the account.

(g) After the balances in such a joint account become nil, the account should be closed.(h) For holdings of a Trust in the joint names of four or more trustees, this procedure for opening the account can be

adopted without any restrictions on receiving credits into that account.

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Account Opening 16

Figure 7- Annexure K of NSDL Business Rules

Participant Name, Address & DP Id(Pre-printed)

APPLICATION FOR OPENING AN ACCOUNT(For Corporates/Clearing Members only)

Date : Client -Id(To be filled by Participant)

We request you to open a depository account in our name as per the following details:(Please fill all the details in CAPITAL LETTERS only)

Type of Account

Body Corporate Bank TrustFI FII OCBOthers (please specify)

Mobile No. SMS facility Yes No.

MAPIN ID:

Client Details

Name of Corporate(Sole/First Holder)

Registered OfficeAddress

Pin CodeCorrespondenceAddress (if different)

Pin Code

Telephone No.

Fax Number

Occupation

3. Form for HUF – The depository account of an HUF can be opened only in the name of its

Karta. DPs should clearly designate the account in the name of the Karta as such. The form for

opening HUF accounts is the same as the individual account. While opening such accounts the DP

should select the 'HUF' sub-type in the 'Individual' category of account opening.

4. Form for Companies – A Company, being an artificial person, can open a demat account,

provided its memorandum authorises it to make investment in the securities of other companies.

A demat account in the name of a company should be operated by the person(s) authorised by

a resolution passed by its board of directors. The DP should obtain an attested copy of the

memorandum and board resolution, authorising the opening and mode of operation of the demat

account.

Details of Introducer - If an existing client has introduced a new client to the DP his signature

is required on the form. In other cases, the DP may ask for details that it considers appropriate.

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Account Opening 17

Mobile No.

E-mail ID:

SMS facility Yes No.

MAPIN ID:

Other Holder Details

Second HolderName

Name of Father/Husband

Address

Pin CodeTelephone No.

Fax Number

Occupation

Mobile No.

E-mail ID:

SMS facility Yes No.

MAPIN ID:

Third HolderName

Name of Father/Husband

Address

Pin CodeTelephone No.

Fax Number

Occupation

Address for communication /Corporate Benefits (Defaultoption is Registered officeAddress)

Registered / Permanant Address

Correspondence Address / Foreign Address

In Case of FIIs/OCBs/Others (as may be applicable)

Foreign Address

RBI Reference No.

RBI Approval Date

SEBI Registration No. (for FIIs)

Bank Details

Bank Sub-type Savings Account Current Account

Bank Account No.

Bank Name

Branch Address

Pin Code

9-Digit Code Number of the Bank and branchappearing on the MICR cheque issued by the Bank

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Account Opening 18

Financial Details

P.A.N. IT Circle / Ward / District No.

Sole/First Holder

Second Holder

Third Holder

Standing Instructions

I/We authorise you to receive credits automatically into Yes Nomy/our account.

Account to be operated through Power of Attorney (PoA) Yes No

Introduction(by an existing account holder / applicant’s bank)

DP ID: Client ID: (Incase of existing account holder)

I confirm the identity and address of the applicant(s)

Name: Signature of Introducer /

Signature and Seal incase of Bank(To be verified by DP official)

Clearing Member Details (to be filled up by Clearing Members only)

Name of Stock Exchange

Name of Clearing Corporation

Clearing Member Id

SEBI Registration No.

Trade Name

CM-BP-Id(to be filled up by Participant)

Signature AcrossPhotograph

Signature AcrossPhotograph

Signature AcrossPhotograph

Please attach recent passport size photographs in the space provided below:

Sole/First Holder Second Holder Third Holder

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Account Opening 19

DeclarationThe rules and regulations of the Depository and Depository Participants pertaining to an account whichare in force now have been read by us and we have understood the same and we agree to abide by andto be bound by the rules as are in force from time to time for such accounts. We also declare that theparticulars given by us are true to the best of our knowledge as on the date of making such application.We further agree that any false / misleading information given by us or suppression of any material factwill render our account liable for termination and further action.

Authorised Signatories (Enclose a Board Resolution for Authorised Signatories)

Sole/First Holder Name Signature(s)

First Signatory

Second Signatory

Third Signatory

Other HoldersSecond Holder

Third Holder

Mode of Operation for Sole/First Holder (In case of joint holdings, all the holders must sign)

Any one singly Jointly by

As per resolution

Others (please specify)

Notes:1. In case of additional signatures, separate annexures should be attached to the application form.

2. As per NSDL Circular No. NSDL/PI/2002/1319 dated August 8, 2002, following documents may beaccepted as proof of identity / proof of address:

(i) Memorandum & Articles of Association (MOA & AOA), board resolution for opening demataccount and the list of authorised signatories alongwith their specimen signatures andphotographs, etc.

(ii) Introduction by an existing account holder or by the applicant's bank.

(iii) Proof of address of the corporate evidenced by the document registered with Registrar ofCompanies or acknowledged copy of Income Tax Return or Bank Statement or Leave andLicense agreement/Agreement for sale.

3. Thumb impressions and signatures other than English or Hindi or any of the other language notcontained in the 8th Schedule of the Constitution of India must be attested by a Magistrate or aNotary Public or a Special Executive Magistrate.

4. Strike off whichever is not applicable.

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Account Opening 20

AcknowledgementParticipant Name, Address & DP Id

Accepted/Rejected the application from M/s as the sole/first holderalongwith and as the second andthird holders respectively for opening of a depository account. Your Client Id/CM-BP-Id (in case ofClearing Members) will be intimated to you shortly on acceptance. Please quote the DP Id & Client Idallotted to you (CM-BP-Id in case of Clearing Members) in all your future correspondence.

Date : Participant Stamp & Signature

5. Form for Minors – A minor may hold shares through his guardian. Accordingly, a minor

may open a depository account only through his guardian. The DP should obtain documents

evidencing the age of minor, e.g., birth certificate, along with the account opening form.

Procedure to be followed in the event of a minor demat account holder attaining the age of

majority : In this regard, it is hereby clarified that, on attaining majority (i.e. 21 years in case of

minor, whose guardian is court-appointed or 18 years, where minor's account is represented

by a natural guardian), the account holder should open a new account as per the guidelines

prescribed in Circular Nos. NSDL/PI/2004/1622 and NSDL/PI/2004/2117 dated September 7,

2004 and November 25, 2004 respectively and execute an agreement as prescribed under

Annexure B of the Bye-Laws of NSDL. The account holder should also submit the following to

the Participant at the time of opening new account:

(1) an application for transferring securities from the old account to the new account and to

hold and operate the said new account; and

(2) a duly attested copy of birth certificate.

Participants are advised to ensure that the new account opened does not have joint holder(s).

Further, Participant should transfer the securities from the old account to the new account and

close the old account only after satisfying itself about the identity of the accountholder.

Participants may submit the claim for waiver of transaction fee charged on account of minor

attaining majority, once a month, (not later than 2 months after opening the new account) to

NSDL as per the prescribed format.

Partnership Firm - Partnership firm cannot be a member of a company under the provisions of

Companies Act, 1956 due to which a depository account cannot be opened in the name of a

partnership firm. However, all the partners of the firm can sign as joint holders, and a joint account

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may be opened in the name of the partners. NSDL Business Rules make it clear that opening a

depository account in the name of a partnership firm will be treated as non-compliance with the

Business Rules, and will be punishable with penalty points. However a CM Account can be opened

for broker firms since partnership firms are allowed to become members of a stock exchange.

Signatures/Thumb Impression – The account opening form should be signed by the sole

holder, in case of single holding; all joint holders, in case of joint holding; authorised signatories, in

the case of corporate accounts; by guardian, in case of a minor; or the constituted attorney, in the

case of NRI accounts. If the signature is in any language other than those specified in the Schedule

VIII to the Constitution of India or English, it should be attested by a Magistrate or a Notary Public

or a Special Executive Magistrate.

In case of illiterate person(s), at the time of opening an account with a Participant, the person must

affix the thumb impression (left hand thumb in case of a male and right hand thumb in case of a

female) on the agreement as well as on the account opening form. All accounts opened by illiterate

person(s) must be either introduced by an existing account holder or must be attested by applicant's

bank. The Client(s) must come in person to open the account and submit instruction forms and affix

his/her thumb impression in the presence of the official of the DP. The DP should identify the

Client(s) by verifying the photograph submitted by the Client(s) and read out/explain the contents of

the account opening form, DP-Client agreement and delivery instruction form to the Client(s). The

official of the DP should then put his signature and remarks "Details explained to the Client(s)", on

the account opening form, copy of the agreement and delivery instruction form. In case such Client(s)

is/are temporarily or permanently disabled due to which he/she cannot come in person to submit

the instruction form as mentioned above, the thumb impression of the Client(s) on the instruction

forms must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate or a

similar authority holding a Public Office and authorised to use the Seal of his office or a manager of

the account holder's bank. The Client should also produce a medical certificate about his/her

disability. A remark should be put in the DPM System (under the authorised signatory details under

"Signatories" screen) at the time of opening the account that the account holder is illiterate or

disabled. Further, the instruction forms issued to such Client(s) should be pre-stamped as "Thumb

Impression". At the time of opening of account, the aforesaid rules should be explained to the

Client(s) in the presence of a witness, who will have to sign the agreement and the account opening

form, as a witness.

Client Account Number - On receipt of a valid application form (complete in all respects

and duly signed) the DP should verify its contents to his satisfaction. If, after verification, the

DP accepts the application and the client-participant agreement is signed, the DP has to enter

the information on the application form into the Depository Participant Module (DPM). The system

then generates a client account number which should be referenced by the client for all its

Account Opening 21

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transactions in the depository system. The system also generates a report containing the details

of client captured from the account opening form. The DP should provide a copy of account

opening confirmation report to the client for his reference and verification about the correctness

of details. The account number has two parts, i.e., 8-digit DP-ID (identification number of

Depository Participant) and 8-digit client account number. Together this number is unique across

depositories. After opening the demat account, the client master list should be sent to the client

at the address given in the account opening form.

Standing Instructions – A DP may register the transfer of securities to or from a beneficial

owner's account only on receipt of instructions from the beneficial owner. No debit or credit can be

given to the account of a beneficial owner without a due authorisation from such beneficial owner.

However, for ease of operation and elimination of redundancies, a clause has been included in the

standard format of client participant agreement. This clause enables clients to give standing

instructions to DPs, at the time of opening the account itself, for receiving securities to the credit of

their accounts without any further instruction from them. These instructions are given as a part of

the account opening form itself. Though not mandatory, it would be better to ask clients to specifically

sign in the standing instruction column, to avoid any confusion at a later stage.

Figure 10

Check List for Account Opening

� Proof of Identity: An authorised official of the Participant should verify the photocopies ofthe any of the prescribed documents submitted with their corresponding originals.[Reference to prescribed documents by SEBI, to be made as on Page 2, under head -Documents for Verification - (a) Proof of Identity.]

� Proof of address (POA): An authorised official of the Participant should verify thephotocopies of the any of the prescribed documents submitted with their correspondingoriginals. [Reference to prescribed documents by SEBI, to be made as on Page 3, underhead - Documents for Verification - (b) Proof of Address.]

� Ensure that all compulsory fields in the account opening form are filled (except PAN/ GIR& nomination which are optional).

� In case of corporate, ensure a copy of Board resolution of authorised signatories. Ensureproper authorization in case of power of attorney holder.

� DP should give a copy of agreement to the client, including the charges.

� Inform clients regarding standing instruction facility.

� Branches of DP to co-ordinate & follow up with Head Office for account opening.

� Ensure account is activated before forwarding Client ID to client.

� Inform settlement deadlines to clients.

Account Opening 22

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Clearing Member AccountThe entities that are authorised to pay in and receive the pay out from a Clearing Corporation

(CC)/ Clearing House against trades done by them or their clients are known as clearing

members (CM). CMs are identified in the system through their CM-BP-ID. All pay-in and pay-

out transactions are carried out through their accounts.

There are two types of clearing members:

1. all members of a stock exchange popularly known as brokers, are clearing members;

2. custodians who are permitted by the stock exchange to act as a clearing member.

Procedure to Open a Clearing Member Account

The steps undertaken to open the account are same as those of individuals, difference lies in the

type of form and details to be filled in and documents to be submitted. The only major difference is

that the clearing member has to first register itself with the clearing corporation and obtain a CC-

CM-ID.The clearing account is identified by the combination of CC-CM-ID given by the clearing

corporation, CM-BP-ID given by the depository and the Client-ID given by the DP.

Before opening a clearing account, the DP should send to the depository the clearing member's

account opening form. The Depository then allots the CM-BP-ID. Based on the CM-BP-ID so

allotted, the account gets activated. The DP then generates Client-ID and communicates the

date of opening the account in DPM system to the depository.

Details to be filled in the form are:

1. Name of the Clearing Member

2. Company's short name, if any

3. Address of the registered office, telephone number, fax number, e-mail, if any

4. Name and address of the authorised signatories, their designations and telephone numbers,

status code, sub-status code

5. Bank account particulars, bank name and its branch, current account number, RBI

reference number, RBI approval date, PAN/ GIR number

6. Signatures of Authorised signatory(ies)

Details of Introducer - If an existing client has introduced a new client to the DP his signature is

required on the form. In other cases, the DP may ask for details that it considers appropriate.

A separate enclosure has to be attached to the account opening form specifying the following

details:

1. Name and address of the clearing member

2. Name and address of the clearing corporation

3. Clearing Corporation Id (CC-ID)

Account Opening 23

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4. Clearing Member Id (CM-ID)

5. Stock Exchange clearing code

6. SEBI Registration number

7. Trade name

8. Copy of Board Resolution for authorised signatories should also be submitted.

Generally, there will be only one CM account per broker for a stock exchange.

Checklist for a Clearing Member Account

• Ensure that all compulsory fields in the account opening form have been entered.

• Ensure that a copy of the board resolution for authorised signatories has been enclosed in

case of corporates.

• Ensure that required letter from Stock Exchange giving CC-ID is enclosed.

• Ensure CM is informed of standing instruction facility for receipt.

• Ensure CM is informed that in case of delivery to CC instruction, either of the joint-holders

can sign the instruction.

• If the forms are received at the branch of a DP, ensure that the account opening form

along with required references is dispatched to head office in a proper and timely manner.

If required, retain a copy.

• Ensure follow up with head office in case defined deadline in respect of account opening

is not met.

The clearing account should only be used for clearing and settlement purposes and not for any

other purpose, e.g., holding of securities. All the securities received in a settlement account

should be transferred to respective beneficial accounts as soon as possible, but in no case

later than the time prescribed by the depository/ stock exchange/SEBI in this regard. The opening

of clearing member account constitutes a "standing instruction" to receive credits from the

clearing corporation when there is a pay-out.

Intermediary Account – As per SEBI Regulations on Stock Lending and Borrowing, only

an approved intermediary can lend and borrow stocks from clients. This intermediary borrows

from lenders and lends to borrowers. Intermediaries registered with SEBI as approved

intermediary may open an intermediary account with a DP of its choice, for executing stock

lending and borrowing transactions made through them. An intermediary account may be opened

only after obtaining registration from SEBI under an approved Stock Lending Scheme, and

getting the approval of the depository for opening the account. The process of opening an

intermediary account is same as for opening a corporate beneficiary account. Securities may

Account Opening 24

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be transferred to or from an intermediary account only as per the procedure prescribed for this

by the depository.

Closure of Account

Closure on Client’s Request – DP can close a depository account on receipt of an applicationin the prescribed format. The application should be made by the account holder or by all thejoint holders. An account can be closed only when there is no balance in the account. In casethere is any balance in the account sought to be closed, the following steps are necessary.

(a) Rematerialisation of all securities standing to the credit of the account at the time of makingthe application for closure; or

(b) Transferring the balance to the credit of another account opened by the same accountholder(s) either with the same participant or with a different participant.

However, where demat request(s) are pending for disposal for a long time in a demat accountand the client desires to close such an account, the following procedure maybe adopted by theclient :

� Write a letter in the prescribed format to the Issuer (with a copy marked to its Participantand respective RTA), requesting for rejection of the pending dematerialisation request(s)and send fresh physical security certificate(s) to the Client directly.

� Enclose a copy of the dematerialisation request generated from DPM system, duly signed& stamped by the Participant, alongwith the aforesaid letter to the Issuer.

On receipt of copy of the letter from the Client, the Participant may also take up the matter withthe concerned Issuer and/or its RTA for rejecting the instruction expeditiously. After the pendingdematerialisation request(s) is/are rejected by the Issuer and/or its RTA, the Participant canclose the account of such Client.

Before closing the account the DP should ensure that all pending transactions have been settled.The request for closure should be processed only after ensuring that there is no balance lyingin the account.

Consolidation of Accounts – Some clients could have opened multiple accounts todematerialise their shares held in multiple combination and sequence of names. However,they may not need so many accounts after they have dematerialised their shares and maywant to bring all their share holdings into one or fewer accounts. This can be achieved by usingnormal off market transfer instruction.

Closure by DP – The DP may also initiate closure of a client's account if the client has defaultedin performing its obligations laid out in the client-participant agreement. The participant shouldgive sufficient notice to the client before initiating closure of his account. The notice shouldclearly state the reasons for closure of account. The process of closing account in such a caseis the same as that of client-initiated closure.

Account Opening 25

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Closure/Shifting of Clearing Account – A clearing member may transfer its clearing accountfrom one DP to another DP. For this, simultaneously applications have to be made for closureof account to the earlier DP and for opening of new clearing member account to the new DP.On receipt of the application, the new DP forwards the application to the depository for approvaland allotment of a new CM-BP-ID. Once the new CM-BP-ID is allotted, the new DP opens anew clearing account and intimates the depository about the new Client-ID. On receipt ofintimation from the new participant, the depository advises the old DP to close the account.The old DP then closes the account and intimates the clearing member. All pay-out of securities,subsequent to closure of old clearing account takes place in the new account.

Mass Shifting of Accounts – DPs may set up new DPM centres as their business expands orto provide direct connectivity from different geographical locations. However, there may beseveral accounts from that location but the account may already have been opened in anotherDPM machine. For example, a DP may start operation from Delhi and may be servicing clientsof Faridabad, Agra, Mathura, etc from this DPM. When the DP finds enough business at Mathura,he may set up a direct connectivity machine at Mathura also. NSDL has given a facility to shiftin mass, all the Mathura accounts from Delhi in the above example to the machine at Mathura.This facility is called mass shifting facility.

Figure 11 - Annexure Q of NSDL Business RulesAPPLICATION FOR CLOSING AN ACCOUNT

Date (dd-mm-yy)

To

DP Name (Pre printed)DP Address (Pre printed)DP Id (Pre printed)

(For Beneficiary Account only)

I / We hereby request you to close my/our account with you .I / We request you to transfer the balances of securities to my/our account with DP Name

bearing my client-id .

Client-Id.

Name(s) of the holders

First/Sole Holder

Second Holder

Third Holder

Signature(s)

First / Sole Holder

Second Holder

Third Holder

Account Opening 26

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(For Clearing Member Account only )

I / We hereby request you to close my/our account with you .

Client Name

Client Id

CM-BP-Id

CC-CM-Id

Authorised Signatories

Names Signatures

Instructions:

1. Relevant portions to be filled in2. Please strike off as N.A. whatever is not applicable

To be submitted in duplicate.

Freezing of Accounts

Account freezing means suspending any further transaction from a depository account till the accountis unfrozen. ISIN/specific number of securities in a demat account may be frozen in certain cases.

1. If a written instruction is received from the client by the DP, requesting freezing of account; or

2. If an electronic request is made by a client to his DP or to the Depository, in the form andmanner as may be prescribed by the Depository.

3. If orders are received by the DP or the depository from the Central or State Government,SEBI, or any order by the court, tribunal, or any statutory authority.

4. If a request is received by the Depository from a DP or client.

5. If orders are passed by Disciplinary Action Committee (DAC) or if DP becomes insolvent,bankrupt or if a corporate DP is being wound up, Depository can freeze accounts and /orISIN and/or specific number of securities held in DP's name.

By freezing an account for debits only (preventing transfer of securities out of the account), theclient can receive securities in his account. An account can also be frozen for debits as well ascredits (preventing any movement of balances out of the account). No transaction can takeplace in such an account until it is reactivated. A frozen account may be unfrozen or reactivated,by taking the reverse steps.

1. On the valid written request of the account holder where he had requested freezing,2. On directions of depository made in pursuance of the order of the appropriate authority.

The DP should immediately inform the client about change in status of the account from 'active'to 'suspended' and vice versa.

Account Opening 27

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Figure 12 - Annexure P of NSDL Business Rules

APPLICATION FOR FREEZING / UNFREEZING OF AN ACCOUNT AND / OR ISIN AND / ORSPECIFIC NUMBER OF SECURITIES

Date (dd-mm-yyyy)ToDP Name (Pre printed)DP Id (Pre printed)DP Address (Pre printed)

I/We request you for the following (please tick whichever is applicable):

Type Account Suspended for Account Suspended for ISIN Quantitydebit only debit & credit

Freeze

Unfreeze

Account Level

Type Please Tick Account No. Execution Date (dd-mm-yyyy)

Suspended for debit only

Suspended for debit & credit

ISIN Level

ISIN Account No. Execution Date (dd-mm-yyyy)

Quantity Level

ISIN Account No. Execution Date Quantity *(dd-mm-yyyy)

1 2 3

Participant Stamp, Date & Time Authorised Signatory(ies)Instructions:1) * Please write the quantity of shares starting with first left box (say, for 200 shares, please

fill-in only first three boxes, whereas for 2000 shares, please fill-in first four boxes; theremaining boxes should be struck-off).

2) Separate forms should be filled-in for freeze and unfreeze.

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Account Opening 29

Changes in Client DetailsA client may change any of the following particulars in the depository system. All he has to dois to submit the changes in writing to the DP.

� Father's/Husband's Name (change from father's name to husband's name may benecessary on account of marriage).

� Standing instruction facility (an investor can activate/deactivate it)

� Address (both local as well as correspondence), telephone number, mobile number (clientsmay make this change at any time depending on their need). Clients have to provide proofof new address while submitting application for change of address.

� Occupation details

� Nominee details (the DP has to obtain the required form from the client duly filled andeffect the changes)

� Bank details (clients may revise the bank details given by him before record date to ensurethat the dividend/interest warrants bear the correct bank details)

� PAN Number details

� In case of NRIs, the Reserve Bank of India reference number and approval date.

� MAPIN UIN

� E-mail addresses

However, the names of the account holders cannot be changed after opening of demat account.

Change of Address for Individual Clients

1) While processing requests for change of address received from Clients, DP should obtainthe following documents:

a) A written application for change of address from the Client. (In case of joint holdings,all holders must sign the application);

b) Proof of identity [Reference to prescribed documents by SEBI, to be made as onPage 2, under head - Documents for Verification - (a) Proof of Identity.]

c) Latest transaction statement of the account received from the Participant;

d) Proof of new address alongwith the original documents of the new address. [Referenceto prescribed documents by SEBI, to be made as on Page 3, under head - Documentsfor Verification - (b) Proof of Address.]

2) The Client should personally visit the office of the DP where the Client maintains andoperates his/her account and submit the application for change of address. However, incase the Client expresses inability to personally visit the office of the Participant, theapplication for change of address alongwith other documents can be submitted throughan authorised representative, whose identity the DP must verify.

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Account Opening 30

3) The Client or its authorised representative should sign the application once again in thepresence of the officials of the DP.

4) The DP should verify the signature of the Client on the application and the identitydocuments with the documents maintained with the DP. Further, the document pertainingto new address should be verified with the original. After due verification, an authorisedofficial of the DP should put his/her signature on the application with remarks "verifiedwith original" and thereafter record the change of address in the DPM system.

5) However, in case DP could not verify the documents because the records of the documentssubmitted by the Client are kept at a different place, then the Participant must verify thesame within a period of seven working days and only then effect the change.

6) After effecting the change of address in the DPM system, the Participant should send acommunication to the Client, confirming the change of address, to the old and the newaddresses.

Change of Address for Corporate Clients

The following procedure is to be followed for change of address for Corporate clients:

1) A written application for change of address of the corporate entity, signed by all theauthorised signatories should be submitted to the DP.

2) Following documents should be submitted alongwith the application:

(a) Latest transaction statement of the corporate's account received from the DP.

(b) Proof of new address (copies of the aforementioned documents) alongwith the originaldocument of new address, for verification by the DP.

3) At least one of the authorised signatories should visit the office of the DP in person tosubmit its application for change of address alongwith necessary documents and sign theapplication once again in the presence of the officials of the DP.

4) An authorised official of the DP to verify the application and the abovementioned documentswith the original and put his/her signature on the application with remarks "verified" andthereafter record the change of address in the DPM system.

5) The DP should write a letter to the Client at the old address as well as the new address toconfirm the change of address.

Change of Signature

1. The Client should make a request in writing specifying reasons for change in signature.

2. New signature should be duly attested by Client's banker.

3. Client should visit DP's office personally and produce valid proof of identity as well as thelatest transaction statement of its account.

4. In the presence of officials of DP, Client should affix his/her new signature.

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An authorised official of the DP shall, under his signature, verify the identity proof with the proofand photograph that were furnished at the time of opening of account and thereafter, if foundsatisfactory, make necessary changes in its records.

Figure 13

TAX IMPLICATION FOR DEMATERIALISED SHARES

The significant feature of the dematerialised securities is that they are fungible, i.e., all the

holdings of a particular security are identical and inter-changeable and they have no unique

characteristic such as distinctive number, certificate number, folio number, etc. As the holdings

of any securities in dematerialised form is represented only by the account with the depository,

under this system, it is not possible to link the purchase of a security with its sale by means of

distinctive number, etc. For this reason, necessary amendments have been carried out in the

Income-tax Act to provide for the computation of capital gains in respect of securities held in

dematerialised form.

The primary issue under the Income-tax Act, in the case of securities whether held in physical

form or in the dematerialised form, remains the determination of cost of acquisition and the

period of holding. To determine cost of acquisition and date of purchase of securities, the

contract note issued by the broker can be referred to. The only problem with securities held in

dematerialised form is that, being fungible, the distinct trail linking every share to a certificate

and its unique distinctive number and linking it with its subsequent sale is not available, thus

making determination of 'period of holding' difficult.

Hence CBDT has clarified that in the case of securities held in dematerialised form, for determining

'date of transfer' and 'period of holding', the FIFO (first in first out) method would be applicable.

When applied to an account holding dematerialised securities, it implies that, out of the existing

holdings, the item that first entered into the account is deemed to be the first to be sold out.

However, when actually operating an account of dematerialised stock by applying FIFO system,

certain other issues can arise. For instance, an investor can hold part of his holdings of a

security in physical form and remaining in dematerialised form. Further, he may hold his

dematerialised holdings in more than one account with one or more DPs. In such a situation

there can be doubts whether the FIFO system is to be applied globally on the entire holdings of

physical and dematerialised holdings or not. In this connection CBDT has clarified that:

� FIFO method will be applied only in respect of the dematerialised holdings because in

case of sale of dematerialised securities, the securities held in physical form cannot be

construed to have been sold as they continue to remain in possession of the investor and

are identified separately.

Account Opening 31

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Account Opening 32

� In the depository system, the investor can open and hold multiple accounts. In such a

case, where an investor has more than one-security account, FIFO method will be applied

account wise. This is because in case where a particular account of an investor is debited

for sale of securities, the securities lying in his other account cannot be construed to have

been sold as they continue to remain in that account.

� If in an existing account of dematerialised stock, old physical stock is dematerialised and

entered at a later date, under the FIFO method, the basis for determining the movement

out of the account is the date of entry into the account. This is illustrated by the following

example:

Date of Credit Particulars Quantity

01/01/2000 Purchased directly in dematerialised form on 24/12/1999 2000

05/01/2000 Dematerialised shares originally purchased in March 1985 5000

10/01/2000 Purchased directly in dematerialised form on 06/01/2000 4000

15/01/2000 Dematerialised shares originally purchased in May 1974 3000

If say, 2500 shares were sold from out of this account, then the period of holding and the cost

of acquisition of the first 2000 shares should be as from 24/12/1999 and the cost thereof,

whereas the balance will be treated as having been acquired in March 1985, at the relevant

cost. This is the effect of FIFO method.

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Transmission & Nomination 33

CHAPTER 9

Transmission & Nomination

One of the lesser-known but widely experienced problems of dealing in securities is with regard

to their transmission. The Companies Act, 1956, distinguishes transmission of shares from

transfer of shares. While transfer of shares relates to a voluntary act of the shareholder,

transmission is brought about by operation of law. The word "transmission" means devolution

of title to shares, for example, devolution by death, succession, inheritance, bankruptcy, marriage,

etc. The person on whom the shares devolve has to prove his entitlement by submitting

appropriate documents and seek transmission. If the securities are held in the depository system,

documents have to be submitted to the DP.

If the securities are held in physical form, the documents have to be sent to the company for

effecting transmission. If the deceased shareholder had holdings in several companies, to effect

transmission of securities, the relevant documents must be sent to each of the companies,

alongwith the securities. Survivors have to follow-up with each of the companies in order to get

the transmission effected before the book closure, if they wish to avail of the benefits accruing

through such shares. In the depository system, such problems are mitigated as the securities

are held as account balances in the electronic form. The process of transmission through NSDL

is simple as well as quicker because the successor to the title interacts only with one entity i.e.,

his DP. Transactions can be for sole holding cases as well as for joint holdings.

Single Holder

In the event of death of the sole holder, if valid nomination has not been made, the claimants/

successors/legal heirs of the deceased can get the securities transmitted in their favour by

submitting their claim duly supported by the relevant legal documents to the DP. If the claimants/

legal heirs/successors have an existing beneficiary account in their name, the securities to be

transmitted would be credited to their existing account. In other cases, claimants/legal heirs/

successors will have to open an account with a DP to get the securities transmitted.

Joint Accounts

If any one of the joint holders of a security dies, the surviving joint holders can get the securities

transmitted in their favour by producing the death certificate of the deceased joint holder. The

surviving joint holder(s) will have to open a new account with the DP in their name(s).

In case of securities held jointly

� The surviving holder(s) to have a separate account with any DP.

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� Ensure all surviving holder(s) sign the instruction form.

� Ensure that instruction form is accompanied with a copy of notarised death certificate.

� Verify signature.

Procedure for Transmission of securities held singly :

The legal heir(s) or legal representative(s) of the deceased have to make a request, in the

prescribed form to the DP for transmitting the balances lying in the account of the deceased to

their account. A single request is sufficient for all securities held in the account of the deceased.

The following documents have to be submitted with the request for transmission:

1. A copy of the death certificate, duly notarised;

2. A copy of the succession certificate, duly notarised, or an order of a competent court, if the

deceased has not left a Will; or

3. A copy of the Probate or Letter of Administration duly notarised.

Where the market value of the securities held in each of the accounts of the deceased on the

date of application-for transmission does not exceed Rs. One lakh, DP may admit the request

for transmission. The following documents are sufficient:

1. Copy of death certificate duly notarised;

2. Letter of Indemnity duly supported by a guarantee of an independent surety acceptable to

the DP, made on appropriate non-judicial stamp paper;

3. An affidavit made on appropriate non-judicial stamp paper; and

4. No objection certificate(s) from all the legal heir(s).

Before effecting the transmission of securities, the DP ensures the validity of the documents

submitted by the legal heir(s) or the legal representatives of the deceased. After effecting the

transmission, the DP closes the account of the deceased.

Procedure for Transmission of Securities held by Karta of Hindu Undivided Family (HUF)in the Depository:

Upon death of the Karta of a Hindu Undivided Family (HUF), the surviving member(s) of the HUF

may appoint the eldest surviving male member of the HUF surviving members, as the new Karta of

the HUF.

For transmission of securities to the account of the new Karta from the account of the deceased

Karta, the surviving members through the new Karta shall make a joint application to the Participant

in the Form specified in Annexure “O” (Figure 14) along with the following documents:

i. True Copy of the death certificate of the Karta, duly certified by a notary public;

ii. An appropriate order by a competent court,

If the surviving members or the New Karta express their inability to produce the order of a competent

Court, and that the market value of securities lying to the credit of such account as on the date of

Transmission & Nomination 34

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application for transmission of securities does not exceed Rupees Ten Lakh then the Participant

shall process the transmission request on the basis of the following documents:

a) Request for transmission in Annexure “O”, duly signed by the New Karta;

b) A declaration of the list of surviving members of HUF in an affidavit in the prescribed form

(Annexure “O”), duly notarised;

c) Letter of Indemnity in the prescribed form (Annexure “O”) from the surviving members.

d) Where there is an objection from any member of the HUF, transmission of securities held in

the beneficial owner account should be effected only on the basis of a Decree by a competent

Court or the Deed of Partition.

The surviving members shall furnish to the Participant the certified copy of the Settlement Deed

/ Deed of Partition / Decree of the relevant Court duly stamped, in case the HUF goes into

separation / partition for dealing with the securities lying in the beneficial owner account held by

the deceased Karta, and furnish to the Participant the details of the beneficial owner accounts

of the individual members in order to have the securities distributed to their respective accounts.

The Participant shall ensure that the documents submitted by the surviving members or the

new Karta are in order and shall then effect a transfer of the balances to the client account of

the new Karta.

After effecting the transmission, the Participant shall close the account held in the name of the

deceased Karta.

Figure 14

Check List for Transmission

� The surviving holder(s)/ legal heir(s)/ representative(s) to have account with DP.� All surviving holder(s) / legal heir(s)/ representative(s) to sign transmission instruction.� In case of joint holdings, transmission instruction to be accompanied with notarised death

certificate.� In case of single holdings, additional documents are required (list provided in check list).� In case of singly held securities (market value of which is < 1 lac per account), if relevant

documents mentioned above are not available, request can be executed provided certainconditions are met– copy of notarised death certificate– letter of indemnity supported by guarantee of independent– surety made on non-judicial stamp paper– an affidavit made on non- judicial paper– no objection certificate from all legal heir(s)

� Verify signature.

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Transmission & Nomination 36

TRANSMISSION FORM

DateTo,Name of ParticipantAddress of Participant

I/We, the undersigned, being the

Executor(s) of the Will Legal heir(s)Administrator(s) of the Estate Joint holder(s)Successor(s) to the Estate NomineeSurvivors of HUF

of Mr./Mrs./Ms. ,the deceased, of which *nomination / probate/ letterof administration / succession certificate was duly granted to me / us on the day of

of hereby request you to register me/us as the beneficial owner(s)in respect of the securities standing in the name of the said deceased under Client Id DP Id

, the details of which are as follows:

ISIN Name of Company No. of securities

I/We give hereunder the details of my/our account with a Participant to which the security balances arerequested to be transmitted:

Name Client Id DP Id

I/We hereby submit the following documents to support my claim for the said securities.

Death certificate IndemnitySuccession certificate AffidavitProbate of the Will Letter of suretyLetter of Administration No objection certificate(s)Court Decree Deed of Partition

Sr. No. Name Signature

Note:1. This request form should be signed by the surviving joint holder(s)/ legal heir(s)/ legal

representative(s)/nominee / all surviving members of the HUF, as the case may be.2. *Strike off whichever is not applicable.

Figure 15 - Annexure O of NSDL Business Rules

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Transmission & Nomination 37

Indemnity to be executed on Non-judicial Stamp paper of appropriate value

LETTER OF INDEMNITY(to be given by claimant(s) where no nomination has been made)

To,DP and NSDLAddress

Dear Sirs,

Sub : Transmission of securities standing in the name of Late Mr./Mrs. ________________.

I/We hereby inform you that Mr./Mrs._________________ the deceased, was holding a Client accountno._________ with _______________ a Depository Participant having DP id ______________________.The said deceased was holding the following securities :

ISIN Name of Company No. of securities

The said deceased died intestate without leaving a Will on the __________ day of ______ _____.

We further inform you that he/she left behind him/her as his/her only surviving heirs and next of kin, thefollowing persons according to the Law of Intestate Succession applicable to him/her by which he/shewas governed at the time of his/her death.

(a)

(b)

(c)

We have, therefore, approached you with a request to transfer the aforesaid securities in the name ofthe undersigned Mr./Mrs./Ms.______________ on my/our behalf without insisting of production of asuccession certificate or an order of the court of competent jurisdiction and you have kindly agreed to doso on my/our executing an indemnity as is herein contained and on relying on the information hereingiven by us believing the same to be true.

In consideration therefore of your having at our request agreed to transfer securities to the name of theundersigned I/we hereby jointly and severely agree and undertake toindemnify and keep indemnified, saved, defended, harmless you and your successors and assigns forall time hereafter against all losses, costs, claims, actions, demands, risks, charges, expenses, damagesetc., whatsoever which you may suffer and/or incur by reason of your, at my/our request, transferringthe said securities as herein above mentioned, to the undersigned without insisting onproduction of a succession certificate or an order of the court of competent jurisdiction.

IN WITNESS WHEREOF THE said [name(s) of applicant(s)]have here unto set their respective hands and seals this day of of .

Signed, sealed and delivered by the said applicant(s)

Signature(s) of applicant(s)

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Deed of Indemnity provided by each of the surviving members of the HUF indemnifying NSDLfrom and against all losses, liability, costs and expenses, including legal fees

(Rs. 200 stamp paper)

DEED OF INDEMNITY(In case of transmission of securities held by Karta of HUF)

THIS DEED OF INDEMNITY is made at this day of 200 :

By:

Sr. No. Name of Applicant Age Gender Address

(Collectively, "Surviving Members")

IN FAVOUR OF: (Name of Participant), and having its registered address at and acting as a duly registered Participant under the provisions

of The Depositories Act, 1996, Regulations and Bye-Laws made thereunder (hereinafter referred to as"Participant", which expression shall, unless it be repugnant or contrary to the context thereof, meanand include its successors and permitted assigns)

AND

National Securities Depository Limited (NSDL), and having its registered address at 4th Floor, TradeWorld, "A" Wing, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013 andacting as a duly registered Depository under the provisions of The Depositories Act, 1996, Regulationsand Bye-Laws made thereunder (hereinafter referred to as "NSDL", which expression shall, unless it berepugnant or contrary to the context thereof, mean and include its successors and permitted assigns)

WHEREAS:

A. The Surviving Members are members of Hindu Undivided Family ("HUF"), which holds a beneficialowner account in the name of , the Deceased Karta, with the Participant bearingClient Id ("the said beneficial owner account"), with Participant having DP Id

;

B. ("the Deceased Karta") was named as the account holder in the said beneficialowner account.

C. The Deceased Karta passed away on .

D. is the new Karta of our HUF and shall hold the securities lying to the credit ofthe said Demat Account.

E. The surviving members have requested the Participant to transmit the securities held in the saidbeneficial owner account held in the name of the Deceased Karta to the beneficial owner accountopened in the name of the new Karta and bearing Client Id held with (Name of Participant) DP Id and to effect the change in beneficial ownership.

F. The surviving members have requested the Participant to effect the foregoing change by transmittingthe securities held in the said beneficial owner account held by the Deceased Karta to the beneficialowner account held in the name of the new Karta, who has been solemnly affirmed on oath to bethe newly elected Karta, without insisting on production of a succession certificate or an order of

Transmission & Nomination 38

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the court of competent jurisdiction, which we undertake to file with the Participant no sooner thanthe same is available to us, and which we shall pursue in right earnest.

THIS DEED WITNESSTH that in consideration of the Participant agreeing to processthe aforesaid request for change of account holder by transmitting the securities held in the said beneficialowner account held in the name of the Deceased Karta to the beneficial owner account held in thename of the new Karta (Client Id ; DP Id ), that we hereby jointly and severallyindemnify the Participant and NSDL and agree to keep indemnified and hold theParticipant and NSDL saved, harmless and defended for all time hereafter from and against all losses,claims, legal proceedings, actions, demands, risks, charges, taxes, duties, damages, costs, expenses,including attorney and legal fees and penalties whatsoever which may be initiated against the Participantor NSDL by reason of the Participant having agreed at our request to change the name of the accountholder of the said beneficial owner account from the Deceased Karta to the new Karta as aforesaidwithout insisting on production of a succession certificate or an order of the court of competent jurisdiction.If called upon by the Participant or NSDL to do so, we shall join any proceedings that may be initiatedagainst the Participant and or NSDL and we shall defend at our cost any such proceedings. Further, weshall initiate such proceedings as may be considered necessary by the Participant and or NSDL, ifcalled upon by the Participant and or NSDL to do so, in order to protect the Participant's and or NSDL’sinterests and to further and perfect the indemnity granted hereby in favour of NSDL.

IN WITNESS WHEREOF:

Dated this day of 200

Signed and delivered by the Surviving Members:

Name of Surviving Member(s) Signature(s)

Before meNotary Public

SURETY

(to be given by claimant(s) where no nomination has been made)

I the undersigned certify that the above facts are true to the best of my knowledge and bind myself assurety to make good all claims, charges, costs, damages, demands, expenses and losses which theParticipant/NSDL, its successors and assigns may sustain, incur or be liable for in consequence ofcomplying with the request contained above of the applicant(s) herein and the Participant/ NSDL and itssuccessors, assigns will be entitled to claim and realise all claims, charges, costs, damages, demands,expenses and losses from me or from my properties, as the case may be.

Signature of SuretyName : Address

Transmission & Nomination 39

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Date : Place :

(Signature of Magistrate/Notary)

Full Name and : Address of Magistrate/ Notary

PINRegd. No.

Use space below to affix:

Notarial/Court Fee Stamp Official Seal of Magistrate/Notary

Note: This indemnity is to be executed in the presence Magistrate/Public notaryof a first class or stipendiary /Judicial.

This affidavit is to be executed on Non-judicial Stamp paper of appropriate value.

A F F I D A V I T(to be given by legal heir(s) when nomination has not been made)

I son/daughter/spouseof residing at do hereby solemnly affirm on oath and state as under :-

1. That Mr./Mrs. the deceased, was holding a Client account no.with a Depository Participant having DP Id . The said deceased washolding the following securities :

ISIN Name of Company No. of securities

2. That the deceased had died intestate on at .3. That the following are the only legal heir(s) of late Mr./Mrs. .

Name Address Age Relationship withthe deceased

1234

Transmission & Nomination 40

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4. That out of aforesaid legal heirs Master/Kum. aged _____ years is a minorand he/she is being represented by his/her father/mother and natural guardianMr./Mrs. .

5. That all the legal heirs of my deceased have applied to (DP name) to register the aforesaid securities in my/our individual/joint beneficial owner accountand have executed a Letter of Indemnity in favour of the Participant/NSDL holding the Participant/NSDL indemnified against any loss, cost, expenses or damages which may be caused to them inconsequence of any claim which may be made by or on behalf of any person claiming any interestin the said shares.

DEPONENT

V E R I F I C A T I O N(to be given by legal heir(s) when nomination has not been made)

I hereby solemnly affirm and say that what is stated herein above are true to my knowledge and nothinghas been concealed therein and that I am competent to contract and entitled to rights and benefits ofthe above securities.

Solemnly affirmed at on the day of of .

Signed in the presence ofFull Name and :

Address of

Magistrate/

Notary (Signature of Magistrate/Notary) Pin :

Regd. No

Use space below to affix:

Notorial/Court Fee Stamps Official Seal of Magistrate/Notary

Notes: 1. This affidavit is to be executed in the presence of a first class or stipendiary Magistrate/Public notary /Judicial.

2. This affidavit should be signed by each deponent separately.

Transmission & Nomination 41

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This affidavit is to be executed on Non-judicial Stamp paper of appropriate value.

A F F I D A V I T(to be given by Nominee. In case of Minor Nominee the Guardian shall execute the same)

I son/daughter/spouseof residing at dohereby solemnly affirm on oath and state as under :-

1. That Mr./Mrs. the deceased, was holding a Clientaccount no. with a Depository Participant having DP Id . Thesaid deceased was holding the following securities :

ISIN Name of Company No. of securities

2. That the deceased made a valid Nomination in favour of :-

3. That the aforesaid nominee Master/Kum. aged _____years is a minorand he/she is being represented by his/her father/mother and natural guardian Mr./Mrs.

4. That the nominee / has applied to (DP name) to register the aforesaid securitiesin my individual beneficial owner account having Client Id. and DP Id.

.

DEPONENT

V E R I F I C A T I O N(to be given by Nominee. In case of Minor Nominee the Guardian shall execute the same)

I hereby solemnly affirm and say that what is stated herein above are true to my knowledge and nothinghas been concealed therein and that I am competent to contract and entitled to rights and benefits ofthe above securities.

Solemnly affirmed at on the day of of .

Signed in the presence ofFull Name and : Address of Magistrate/ Notary (Signature of Magistrate/Notary) Pin :Regd. No

Transmission & Nomination 42

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Use space below to affix:

Notorial/Court Fee Stamps Official Seal of Magistrate/Notary

Notes: 1. This affidavit is to be executed in the presence of a first class or stipendiaryMagistrate/Public notary /Judicial.

2. This affidavit should be signed by each deponent separately.

LETTER OF NO OBJECTION(not required in case of Nomination)

DateTo,Name of ParticipantAddress of Participant

Dear Sirs,

Re : Transmission of security balances standing in the name of late _____________ under Client Id____________ DP Id ___________.

1. In connection with the above, I wish inform you that Mr./Mrs. _____________ expired on_________________ and was holding the following securities under the Client Id _________ andDP Id _________.

ISIN Name of Company No. of securities

2. I the undersigned, residing at _______________, am a legal heir of the said deceased.

3. I do not desire to make any claim of title of the said securities and have no objection whatsoever intransmitting the said securities in the name(s) of Mr./Mrs. _____________ who has/have opened abeneficial owner account(s) under Client Id _______ and DP Id _______.

4. In consideration of registration of the aforesaid securities in the client account of Mr./Mrs._______under DP Id________ Client Id ________at my request, I hereby agree to renounce all my rightsexisting as well as they may accrue to me in future in respect of the aforesaid securities.

Signed in the presence of

Bank Manager Signature of the legal heir

Transmission & Nomination 43

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Full Name and Address of Bank Manager

Note: This letter of No Objection should be signed by each legal heir separately.

LETTER OF SURETY

(not required in case of Nomination)

Name of Surety *Permanent ResidentialAddress

Pin

Age years Permanent Account No. **

* A person cannot stand as surety for spouse/ family member ** Furnish proof of PAN

(Fill in any one or more of the following boxes, whichever is applicable)

A. Details of Employment1. Name of Employer :2. Place of Employment :

3. Annual salary :4. Other emoluments :

B. Details of immovable property owned :(Absolutely in own name and not as member of a joint & undivided Hindu family. Specify whether

the immovable property consists of houses or mere land)

1. Within the municipal limits :2. Situation :3. Value :4. Annual rent realised :

C. Details of business owned(absolutely in own name and not as a partner)

1. Name of organisation :2. Nature of business and location :3. Annual turnover :4. Annual profits :

Date : (Signature of Surety)

Full Name and Address of Bank Manager Signed in the presence of

Pin (Bank Manager)

Transmission & Nomination 44

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Affidavit from the surviving members of the HUF declaring that the person designated by them isindeed the new Karta of the HUF and as to completeness and accuracy of the information provided.

AFFIDAVIT(In case of transmission of securities held by Karta of HUF)

We, the applicants listed below, residing at the respective addresses set out below,

Sr. No. Name of Applicant Age Gender Address

do hereby solemnly affirm on oath and state that as under:1. ___________________ ("the Deceased Karta") was holding a beneficial owner account bearing

Client Id ___________; DP Id _____________ ("the said beneficial owner account") with____________________ , (Name of the Participant), as the Karta for and on behalf of our HUF.

2. The Deceased Karta passed away on ______________.3. We are all the surviving members of a Hindu Undivided Family ("HUF").4. We state and declare that the aforesaid list of surviving members is complete and exhaustive, and

does not leave out any member of the HUF. We affirm that this list is accurate in all respectswhatsoever.

5. The said Deceased Karta was holding the following securities in the said Demat Account: (Applicantsto reproduce from the latest Transaction Statement or Statement of Holdings)

6. ___________________ is the new Karta for our HUF and shall hold the securities lying to the creditof the said beneficial owner account. We confirm to _________________________ (Name of theParticipant) that the new Karta is indeed the new Karta of our HUF.

7. We have requested that the securities be transmitted from the said beneficial owner account heldby the Deceased Karta to the beneficial owner account opened in the name of the DesignatedKarta (Client Id _________; DP Id ______________) and have filed a Transmission Form on____________ (date). We state that all the information provided therein and in this Affidavit iscomplete and accurate in all respects and that all the members of the HUF are fully aware of theabove request made to the Participant and there is no pending dispute, difference, objection orclaim to the same among any of the members of the HUF in this regard.

V E R I F I C A T I O N

We hereby solemnly affirm and say that what is stated herein above are true to my knowledge andnothing has been concealed therein.

Solemnly affirmed at ______________, this ______ day of ________ 200__:

Sr. No. Name of Applicant (s) Signature

Before meNotary Public

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Transmission & Nomination 46

Nomination Facility

The Companies (Amendment) Act, 1999 has introduced provisions for nomination in respect of

shares, debentures, fixed deposits, etc. The nomination facility fulfils one of the long-felt needs

of the investors. This facility was already in place for deposits in banking industry. Under the

provisions, a shareholder, a debenture-holder, a bondholder or a deposit-holder can nominate

a person, in whom the shares or debentures or bond or deposits would vest, in the event of

original investor's death. The facility can be availed of by any person whether resident Indian or

a non-resident Indian investor.

Nomination in Depository Mode

Figure 16 - Annexure JA of NSDL Business Rules

FORM FOR NOMINATION / CANCELLATION OF NOMINATION

(To be filled in by individual applying singly or jointly)

I/We _________________ and _______________ the holders of beneficiary owner account bearingClient Id No. ___________ held with M/s ___________________ a NSDL Depository Participant bearingDP Id No; _________________ wish to *make a nomination / cancel the nomination dated ________and do hereby *nominate / cancel the nomination made by me/ us on the ______ day of _______ thefollowing person in whom all rights of transfer and / or amount payable in respect of securitiesheld in the Depository by me/ us in the said beneficiary owner account shall vest in the event ofmy/our death /* and consequently all rights and liabilities in respect of beneficiary ownership in thesecurities held by me/ us in the said account shall vest in me/us.(* strike out whichever is not applicable)

Photographof the

Nominee

Name and Address of NomineeName :

Address :

Date of Birth* :

(to be furnished in case the Nominee is a minor)

Signature of the Nominee :

**The Nominee is a minor whose guardian is :

Address of the Guardian

Signature of the guardian :

(in case of guardian his photograph should be affixed) (to be deleted if not applicable)

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Transmission & Nomination 47

Beneficial Owner 1) Signature:

Name:

Address:

Date:

2) Signature:

Name:

Address:

Date:

Signature of two Witnesses

Name and Address Signature with date

1.

2.

Instructions:

1. The nomination can be made only by individuals holding beneficiary owner accounts on theirown behalf singly or jointly. Non- individuals including society, trust, body corporate, partnershipfirm, karta of Hindu Undivided Family, holder of power of attorney cannot nominate. If the accountis held jointly all joint holders will sign the nomination form.

2. A minor can be nominated. In that event, the name and address of the Guardian of the minornominee shall be provided by the beneficial owner.

3. The Nominee shall not be a trust, society, body corporate, partnership firm, karta of HinduUndivided Family or a power of Attorney holder. A non-resident Indian can be a Nominee, subjectto the exchange controls in force, from time to time.

4. Nomination in respect of the beneficiary owner account stands rescinded upon closure of thebeneficiary owner account. Similarly, the nomination in respect of the securities shall standterminated upon transfer of the securities.

5. Transfer of securities in favour of a Nominee shall be valid discharge by the depository againstthe legal heir.

6. The cancellation of nomination can be made by individuals only holding beneficiary owneraccounts on their own behalf singly or jointly by the same persons who made the originalnomination. Non- individuals including society, trust, body corporate, partnership firm, karta ofHindu Undivided Family, holder of power of attorney cannot cancel the nomination. If thebeneficiary owner account is held jointly, all joint holders will sign the cancellation form.

7. On cancellation of the nomination, the nomination shall stand rescinded and the depositoryshall not be under any obligation to transfer the securities in favour of the Nominee.

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Transmission & Nomination 48

Investors holding securities in dematerialised form have the option of nominating persons who

would be entitled to receive securities outstanding in their names in the event of their death.

Shareholders have the option of holding securities in joint names without nomination or in

single name with nomination. Nomination is requested at the time of opening the depository

account itself. There is a separate prescribed form for nomination under depository segment.

Investors can appoint a nominee at the time of opening a depository account itself. Nominees

can be changed at will by resubmitting the nomination details in the prescribed form. The DP

has to enter and update the nominee details submitted by the account holder. If the account

holder is dead, the securities lying to the credit of the account holder may be transmitted to the

nominee's account after the DP verifies the identity of the nominee.

Nomination can be made only by individuals holding beneficiary owner accounts on their own

behalf singly or jointly. Non-individuals including society, trust, body corporate, karta of Hindu

Undivided Family (HUF), holder of power of attorney cannot nominate. If the account is held

jointly all joint holders will be required to sign the nomination form.

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CHAPTER 10

Dematerialisation

One of the methods for preventing all the problems that occur with physical securities is through

dematerialisation (demat). India has adopted the demat route in which the book entry is made

electronically against securities that are cancelled. The share certificates are shredded (i.e., its

paper form is destroyed) and a corresponding credit entry of the number of securities (written

on the certificates) is made in the account opened with the Depository Participant (DP).

The securities held in dematerialised form are fungible.3 They do not bear any distinguishable

features like distinctive number, folio number or certificate number. Once the shares are

dematerialised, they lose their identification features in terms of share certificate distinctive

numbers and folio numbers. Title to the securities owned is in terms of number of securities and

not in terms of distinctive numbers, certificate numbers etc.

Each security is identified in the depository system by an International Securities Indentification

Number (ISIN) and a short name. For example, a person owning 100 shares in ABC Ltd. in

physical form will record his ownership as below:

Company Name: ABC Ltd.

No. of Shares: 100

Distinctive Nos.: 932654701 to 932654800

Certificate No.: ABC001263

Folio No.: A658542

In NSDL depository system, the record of ownership will be shown as:

INE001A01013 ABC by demat 100

International Securities Identification Number (ISIN)

Each of the securities dematerialised in the depository bears a distinctive ISIN - an identification

number. International Securities Identification Number (ISIN) is a unique identification number

for each security issued in any of the International Standards Organisation (ISO) member

countries in accordance with the ISIN Standard (ISO 6166). ISO 6166 was developed for use in

an international (cross-border) as well as domestic trades.

ISIN is a 12-character long identification mark. It has three components - a pre-fix, a basic number

and a check digit. The pre-fix is a two-letter country code as stated under ISO 3166 (IN for India).

Dematerialisation 49

3 The dictionary meaning of the word is "movable things that are standardised so that one unit is essentially the same asanother which may be estimated and replaced by weight, number and measure".

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Dematerialisation 50

The basic number comprises of nine alphanumeric characters (letter and/or digits). The check

digit at the end of the ISIN is computed according to the modulus 10 "Double-Add-Double". It

establishes that the ISIN is valid.

Securities issued by the same company, issued at different times or carrying different rights,

terms and conditions are considered different securities for the purpose of allocating ISIN and

are allotted distinct ISINs. In India, SEBI has delegated the assigning of ISIN of various securities

to NSDL. Allotment of ISIN for G-sec is done by Reserve Bank of India. Different ISINs are

allocated to the physical and dematerialised securities of the same issue.

To illustrate, ISIN INE 475C 01 012 has the following break up:

IN - India

E - Company

Last digit - check digit

First four digits 475C - Company serial number;

01 - equity (it can be mutual fund units, debt or Government securities);

01 - issue number;

2 - check digit.

The third digit (E in the above example) may be E, F, A, B or 9. Each one carries the following

meaning:

E - Company

F - Mutual fund unit

A - Central Government Security

B - State Government Security

9 - equity shares with rights which are different from equity shares bearing INE number.

Whenever dealing with ISIN number, it is important to pay special attention to the third digit.

Securities that can be dematerialised

The entire depository system in India is governed by the rules made by the market regulator - SEBI.

According to the SEBI (Depositories and Participants) Regulations, 1996, the following securities

are eligible for holding in dematerialised form.

1. Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities

of similar nature of any incorporated company or other body corporate, including underlying

shares of ADRs and GDRs.

2. Units of mutual funds, rights under collective investment schemes and venture capital funds,

commercial paper, certificate of deposit, securitised debt, money market instruments,

government securities, national saving certificates, kisan vikas patra and unlisted securities.

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Dematerialisation 51

A list of securities available for demat in NSDL depository is made known to all DPs by way of

circulars sent through e-mail. The information is also put up on NSDL's Website - www.nsdl.co.in

and in the monthly information bulletin, NEST Update.

Physical form of securities can be converted into book entry form in NSDL depository system

only if the company which has issued the securities, has entered into an agreement with NSDL

to offer demat facility.

The Demat Process

A holder of eligible securities in the depository system may get his physical holdings converted into

electronic form by making a request through the DP with whom he has his beneficiary account.

Figure 17 - Annexure D of NSDL Business Rules

Participant’s Name, Address & DP Id(pre-printed)

DEMATERIALISATION REQUEST FORM

DRN(to be filled-in by the DP)

Serial No. (Pre Printed) Date :

I/We request you to dematerialise the enclosed certificates into my/our account as per the details givenbelow:

Client Id

Sole/First Holder Name

Second Holder Name

Third Holder Name

Company Name

Type of Security Equity/Others (please specify)

Quantity to be Dematerialised (in figures) (in words)

Face Value

ISIN (To be filled in by the DP) I N

Details of Securities :

� Free Securities � Locked-in SecuritiesFolio No. Certificate Nos. Distinctive Nos. Quantity

From To From To

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Dematerialisation 52

Total No. of Certificates :

Details of Locked-in Securities:

Lock-in reason

Lock-in release date

(In case the space is found to be insufficient, an annexure containing the certificate details in the sameformat may be attached. Please use separate form for free securities and locked-in securities)

Declaration

I/We hereby declare that the above mentioned securities are registered in my/our name. The originalcertificates are hereby surrendered by me/us for dematerialisation. I/We also hereby declare that thesecurities surrendered by me/us for dematerialisation are free from any lien or charge or encumbranceand represents the bonafide securities of the company to the best of my/our knowledge and belief.

Holder(s) Signature(s)

Sole/First Holder

Second Holder

Third Holder

Participant Authorisation

We have received the above-mentioned securities for dematerialisation. The application form is verifiedwith the certificates surrendered for dematerialisation and we certify that the application form is inaccordance with the details mentioned in the enclosed certificates. It is also certified that the holders ofthe securities have beneficiary account with us in the same name(s).

Name of the Executive :Signature : Participant’s Stamp & Date

==============================================================================

AcknowledgementSerial No. (pre-printed)

We hereby acknowledge the receipt of shares/units/bonds/debenturesof surrendered for dematerialisation byMr/Ms/M/s having Client Id .

Date : Participant’s Stamp & Signature

Prerequisites for Dematerialisation Request1. The registered holder of the securities should make the request.2. Securities to be dematerialised must be recognised by NSDL as eligible. In other words,

only those securities whose ISIN has been activated by NSDL, can be dematerialised inthe NSDL system.

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Dematerialisation Process

Investor DP

NSDLR & T Agent

1

2 5

2A

3

4

Dematerialisation 53

3. The company/Issuer should have established connectivity with NSDL. Only after suchconnectivity is established, the securities of that company/Issuer are recognised to be"available for dematerialisation" in the NSDL system.

4. The holder of securities should have a beneficiary account in the same name as it ap-pears on the security certificates to be dematerialised.

5. The request should be made in the prescribed dematerialisation request form.

Procedure for Dematerialisation

Figure 18

Steps:

1. Client/ Investor submits the DRF (Demat Request Form) and physical certificates to DP.DP checks whether the securities are available for demat. Client defaces the certificateby stamping ' Surrendered for Dematerialisation'. DP punches two holes on the name ofthe company and draws two parallel lines across the face of the certificate.

2. DP enters the demat request in his system to be sent to NSDL.

2A. DP despatches the physical certificates along with the DRF to the R&T Agent.

3. NSDL records the details of the electronic request in the system and forwards the requestto the R&T Agent.

4. R&T Agent, on receiving the physical documents and the electronic request, verifies andchecks them. Once the R&T Agent is satisfied, dematerialisation of the concernedsecurities is electronically confirmed to NSDL.

5. NSDL credits the dematerialised securities to the beneficiary account of the investor andintimates the DP electronically. The DP issues a statement of transaction to the client.

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Dematerialisation 54

1. DP provides dematerialisation request forms (DRF) to their clients.

2. The client completes the DRF in all respects and submits to the DP along with the security

certificates to be dematerialised.

3. The DP checks the DRF for validity, completeness and correctness. The following points

shoud be checked particularly :

� The security certificates sought to be dematerialised are attached to DRF.

� The attached security certificates are marked (defaced) with the words 'Surrendered

for Dematerialisation'. The size of the stamp should be atleast four inches in length

and one inch in width (except GOI securities). DP must ensure that the security

certificates submitted for dematerialisation to the Issuer or its Registrar and Transfer

Agent, bear the DP name, DP Id and Client Id. This is a precautionary measure to

prevent misuse of share certificates by anyone.

Figure 19

� The certificates are not mutilated or defaced in a manner affecting any material

information.

� The name of client on DRF and the certificates is exactly the same as in the client's

account in DPM. However, minor variations in the name (like abbreviated name, initials

in place of first name, middle name, minor spelling mistake in the name) may be permitted

if it can be reasonably established that both names are of the same person. The permitted

variations refer to initials not being spelt out fully or put prior to after the surname. In

such cases, if the signature on the DRF matches the specimen signature available with

the DP, the securities can be considered for demat.

� Details like security type, face value, paid-up value, pari-passu status, certificate numbers,

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Regd. Address: 2nd Floor ,Victoria Bldg., Fort, Mumbai

���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������

AMOUNT PAID UP PER SHARE Rs.5/-

FACE VALUE PER EQUITY SHARE Rs.10/-

��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������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Folio No. : A658542 Certificate No.:0123456

Name : AJAY SHAH

JT1 : MEHUL SHAH

*** 200***

Distinctive No. : 932654701- 932654900

Authorised signatory Company Seal

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Dematerialisation 55

distinctive numbers, number of certificates, total quantity of securities and lock-in status

are filled-in correctly.

� Separate DRFs have to be submitted for:

� free and locked-in securities;

� securities locked-in for different reasons;

� each ISIN;

� securities of different paid-up value; and

� for each client account.

� DRF is signed by:

� the sole holder in case of single holding;

� all joint holders in case of joint holding;

� authorised signatories in the case of corporate accounts;

� constituted attorney in the case of NRI accounts.

� The signatures of the client as appearing on DRF should match with the

signatures in the records of the DP. If the signatures do not match, the DP

should satisfy itself about the identity of the client. If necessary, the DP may

insist on attestation of DRF from bankers of the client. DRF should be signed

by all the holders and match with specimen signatures. If the client has a

signature registered with the company which is different from the specimen

signature given to the DP, the client may be advised/allowed to affix both

signatures on the DRF.

4. If the DRF and the accompanying security certificates are not found in order, the DP

should return the DRF and certificates.

5. If DRF and accompanying certificates are found in order, the DP should accept the DRF

and issue an acknowledgement to the client.

6. The DP should enter the dematerialisation request in DPM. DPM generates a request

number (DRN), which should be mentioned on DRF.

7. An authorised person, other than one who entered the DRF details in the DPM, should

verify the details of DRN and release a request to NSDL.

8. Once the DP has received the certificates defaced by the investor, the DP punches two

holes on the name of the Company and draws two parallel lines on the face of the certificate.

The DP should forward the DRF and the relevant security certificates to the Issuer or its

R&T Agent for dematerialisation. DRF and enclosures have to be sent at the "address to

which physical certificates to be sent" communicated by NSDL. The forwarding letter should

refer to the allotted DRN and should be sent within seven days of accepting it from the

client.

9. The Issuer or its R&T Agent verifies the DRF and the accompanying certificates for validity,

completeness and correctness. They also match the details with the intimation received

from NSDL against the same DRN.

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10. In case DRF is not found to be in order, the Issuer or its R&T Agent sends an objectionmemo to the DP, with or without DRF and security certificates depending upon the reasonfor rejection as given below :Rej. Code Rejection Code Description

1) Share quantity not received as mentioned in DRF2) Received quantity is more than the DRF quantity3) Certificates sent are fake4) Certificates sent are reported stolen5) Duplicate certificates already issued6) Forged endorsement7) Incorrect holder(s) name / pattern8) Certificate details mismatch9) DRF sent to incorrect registrar

10) Certificate(s) not received within 30 days11) Signature mismatch12) Court injunction pending13) Miscellaneous14) Demat request initiated under wrong ISIN15) Allotment/call money payment not attached16) Security certificates not available for demat17) Rejected under ACA18) Rejected on account of transfer cum demat.

11. The DP informs the client accordingly and requests removal of reasons for objection. TheDP removes these or provides additional information to the Issuer or its R&T Agent within15 days of receiving the objection memo.

12. If the DP fails to remove the objections within 15 days, the Issuer or its R&T Agent mayreject the request and return DRF and accompanying certificates to the DP. The DP informsthe client accordingly. The DP also returns the security certificates to the client and obtainsan acknowledgement.

13. The DP, if the client so requires, may generate a new dematerialisation request and sendthe securities again to the Issuer or its R&T Agent.

14. If the Issuer or its R&T Agent finds the DRF to be in order, it informs NSDL and authorisesit to create the appropriate credit balance in the client's account. DPM automatically creditsthe client's accounts when DM is updated. For the purpose of income tax calculations, thedate of credit of securities by dematerialisation is taken as the date of acquisition of shares.

15. The DP, on receiving confirmation of credit entry in DPM, informs the client.

16. An R&T Agent is required to confirm/ reject a demat request within 15 days from the date

of receipt of physical shares.

Dematerialisation 56

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Checklist for Investors

While filling up the dematerialisation request form, investors need to check:1. The DRF has to be obtained only from the DP with whom they have opened an account.2. The DRF has to be filled in duplicate/triplicate as required by the DP.3. All the information asked in the form is mandatory and has to be filled.4. Separate forms should be filled for separate ISIN numbers of the company.5. Separate forms should be filled for lock-in and free securities.6. All the holders should sign the DRF form. Signatures should match with those of the

specimens on the account opening form. However, if the signature with the company/R&TAgent is different from the signature with the DP, the client may affix both signatures.

7. The order of the holders should be same as that in the account opening form.8. While submitting the shares they should be defaced by mentioning on it "surrendered for

dematerialisation".9. After submitting the certificates, an acknowledgement slip duly signed by the DP should

be collected.10. Demat request form for dematerialising government securities is different and is called "

DRF - GS".

Checklist for DP

Before accepting the form and share certificates for dematerialisation the DP should check:1. Client has submitted the securities for dematerialisation along with the Dematerialisation

Request Form (DRF).2. No dematerialisation request, other than one from a registered holder of securities, has

been entertained.3. The certificates submitted by the client for dematerialisation belong to the eligible list of

securities admitted by the Depository.4. Verify that the DRF submitted by the client has been filled completely and duly signed.

The DP has to issue to the client an acknowledgement slip duly signed and stamped.5. Verify the signature of the client on the form and compare it with the specimen available in its

records. If the signatures are different, the DP has to ensure proper identification of the client.6. NSDL issues circulars on caution to be exercised in respect of shares belonging to some

companies. Such circulars should be referred to before accepting a demat request.7. If the form is in order, the request details are entered in its DPM and the DPM generates

a Dematerialisation Request Number (DRN).8. The DRN so generated is entered in the space provided for the purpose in the DRF. The

details given in the DRF should match with the details of reports generated by DPM andverified by a person other than the person who had entered the data.

9. The DRF is forwarded to the Issuer or its R&T Agent only after ascertaining that the number ofcertificates annexed with the DRF tallies with the number of certificates mentioned on theDRF, within 7 days of its receipt.

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10. The details of the certificates submitted for dematerialisation with the details filled up arein consonance with the DRF.

11. The client has marked the certificates submitted for dematerialisation with the words"Surrendered for Dematerialisation".

12. DP must ensure that the security certificates submitted for dematerialisation to the Issueror its Registrar and Transfer Agent bear the DP name, DP Id and Client Id. The safety andsecurity of the certificates submitted for dematerialisation till the certificates were forwardedto the Issuer or its R & T has to be ensured.

13. Punch two holes on the company name on the security certificates before forwardingthem to the Issuer or its R&T Agent.

14. Ensure that the client has filled in a separate DRF for securities having distinct ISINs.

15. Ensure that the client has filled in a separate DRF for locked in and free securities havingthe same ISIN.

16. Ensure that the client has submitted a separate DRF for each of his/their accountsmaintained with the DP.

17. DRF and certificates have to be sent to the correct address of the company where theyare accepted. NSDL issues circulars giving information about the addresses where physicaldocuments will be accepted.

Figure 20Precautions to be taken while processing DRF

� Ensure account to have the same sequence of names of holders and name structure as

printed on the physical certificate.

� Ensure ISIN is activated

� Separate DRF for :

� partly & fully paid-up shares

� locked and free holdings

� holdings locked in for different reasons

� locked in holdings having different release date

� different ISINs of the company

� ISIN to be entered by DP.

� All joint holders to sign DRF.

� Check DRF form with details on certificate.

Rejection of DRFA demat request can be rejected in the case of the following objections. The table below gives

the reasons for rejection and the action that DPs need to take in case of each objection.

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Description of Objection Action to be taken by DP/Client

01 Physical quantity of shares/certificatesreceived by R&T Agent from DP is less thanwhat is mentioned in Demat Request FormOR

Physical quantity of shares/certificatesreceived by R&T Agent from DP is more thanmentioned in Demat Request Form.

DRN confirmed for partial/physical quantityreceived from DP or treated under objectionfor total/partial quantity by R&T Agent. R&TAgent may retain documents received fromDP. DP/ Client may contact R&T Agent forany further clarification and may submit freshDemat Request Form to R&T Agent for excessquantity, if any, quoting reference of Objectionletter and previous DRN to enable R&T Agentto link related entries/documents.

02

03 All/some certificates received by R&T Agentfrom DP is/are found to be fake.

All/some certificates received by R&T Agentfrom DP is/are reported lost or stolen and astop is recorded in computer master file(s) ofR&T Agent.

Duplicate certificates earlier issued by R&TAgent in lieu of all/some certificates receivedfor demat by R&T Agent from DP.

All/some certificates received by R&T Agentare found to bear forged or fake endorsementsof Name(s) of Holders.

DRN confirmed for genuine/valid quantityreceived from DP or treated under objectionfor total/partial quantity by R&T Agent. R&TAgent may retain documents received fromDP. DP/client may contact R&T Agent for anyfurther clarification, quoting reference ofObjection letter to enable R&T Agent to linkrelated entries/documents.

04

05

06

07 Name(s) of Holder(s) on all/ some certificatesreceived by R&T Agent differs in DematRequest Form received by R&T Agent fromDP. OR

Details of all/some certificate(s) differ in DematRequest Form received by R&T Agent fromDP

DRN confirmed for valid quantity receivedfrom DP or treated under objection for total/partial quantity by R&T Agent. R&T Agentmay retain documents received from DP.DP/Client may contact R&T Agent for anyfurther clarification, quoting reference ofObjection letter to enable R&T Agent to linkrelated entries. DP/Client to submit freshDemat Request Form to R&T Agent withcorrect particulars, quoting reference ofObjection letter and previous DRN to enableR&T Agent to l ink related entries/documents.

08

Dematerialisation 59

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Description of Objection Action to be taken by DP/Client

09 All/some certificate(s) sent to incorrect R&TAgent by DP

R&T Agent may retain some documents andothers returned to DP by R&T Agent. DP/Client may contact R&T Agent for any furtherclarification, quoting reference of Objectionletter to enable R&T Agent to link relatedentries. DP/Client may forward documents topertinent R&T Agent with fresh DematRequest Form.

10 Certificate(s) not received by R&T Agent intime from DP

DRN treated under objection and closed byR&T Agent. DP/Client may forwardcertificate(s) for dematerialisation with DematRequest Form to R&T Agent under a new/fresh DRN.

11 Signature(s) of Client on Demat Request Formdo not tally with specimen signatures ofHolder(s) recorded with R&T Agent.

R&T Agent may retain DRN and documentsreceived from DP for DRN treated underobjection. DP/Client may submit to R&TAgent a fresh Demat Request Form dulysigned by holder(s) in exact manner asrecorded earlier with R&T Agent. In caseholder(s) is/are unable to reproduce thesignatures as required, specimen ofsignature(s) of signature(s) on DematRequest Form may he verified by a BankManager, under his official stamp/seal,giving full particulars/details of holder(s)bank account number, etc.

12 Stop recorded as per Bank Lien/StatutoryAuthority/Court Order/etc. in computer masterfile(s) of R&T Agent against all/somecertificates) received for dematerialisationfrom DP

DRN confirmed for valid quantity receivedfrom DP or treated under objection for total/partial quantity by R&T Agent. R&T Agentmay retain documents received from DP.DP/Client may contact R&T Agent for anyfurther clarification, quoting reference ofObjection letter to enable R&T Agent to linkrelated entries/documents.

13 DRFs can also be rejected on miscellaneous grounds. These could be any of the reasonsgiven in I to V given below:

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Description of Objection Action to be taken by DP/Client

I Recovery pending from Client for double orexcess payment of Dividend/Interest made byR&T Agent.

R&T Agent may retain DRN and documentsreceived from DP for DRN treated underobjection. DP/Client may contact R&T Agentfor any further clarification, quoting referenceof Objection letter to enable R&T Agent to linkrelated entries. Client to refund of amount toR&T Agent, quoting reference of Objectionletter and DRN to enable R&T Agent to linkrelated entries/documents.

II Duplicate Interest warrants issued by R&TAgent as per request of Client and bankreconciliation incomplete to determine statusof payment.

R&T Agent may retain DRN and documentsreceived from DP for DRN treated underobjection. DP/Client may contact R&T Agentfor any further clarification, quoting referenceof Objection letter to enable R&T Agent to linkrelated entries. DP/Client to await some timefor bank reconciliation completion by R&TAgent, before DRN is confirmed or treatedunder objection as in 13 (i).

III All/some certificates held under differentHolding basis(i.e. Single or Joint) is/arereceived by R&T Agent under same DRN.

Refer objection codes 7 and 8 above foraction taken by R&T Agent and to be takenby DP/Client.

IV All/some certificates sent by DP to incorrectaddress or office(s) of R&T Agent.[For e.g.:All operations of Master Growth and GrandMaster schemes of Unit Trust of India arehandled on completely decentralised basisand computer masterfile(s) are separatelymaintained at specific locations. DPs have totherefore, forward documents for demat toR&T Agent's address at Mumbai, Calcutta,Delhi and Chennai mentioned on reverse ofevery certificate].

DRN confirmed for valid quantity receivedfrom DP or treated under objection for total/partial quantity by R&T Agent. R&T Agentmay retain some documents and othersreturned to DP by R&T Agent. DP/Clientmay contact R&T Agent for any furtherclarification, quoting reference of Objectionletter to enable R&T Agent to link relatedentries. DP/Client may forward documentsto pertinent address or office(s) of R&TAgent with fresh Demat Request Form.

V All/some certificates received by R&T Agentfrom DP do not relate to ISIN (Scheme/Security code) mentioned in Demat RequestNumber or Form.

Refer objection codes 7 and 8 above foraction taken by R&T Agent and to he takenby DP/Client.

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Description of Objection Action to be taken by DP/Client

14 Demat request initiated under wrong ISIN. R&T Agent may reject the demat request andforward the documents to the DP. A freshDemat Request to be generated under thecorrect ISIN by the DP. The documents to besent to the concerned R&T Agent.

15 Allotment/call money payment not attached. R&T Agent may reject the demat request andforward the documents to the DP. Client toattach the Allotment/call money paymentadvice and submit the same to the DP forgenerating a new DRN.In case of anyclarification, DP/Client may contact R&TAgent quoting the reference number of theObjection letter.

16 Security certificates not available for demat. R&T Agent may reject the demat requestand forward the rejected documents to theDP. DP to contact the client and inform theclient accordingly.

17 Rejected under Automatic Corporate Action. R&T Agent may process the demat requestof the investor. If the documents are foundin order the R&T Agent may credit theaccount of the client with proportionatenumber of shares through Credit CorporateAction.Client to check the TransactionStatement and if the shares have not beencredited in the demat account, client tocontact the Company/R&T Agent.

18 Rejected on account of transfer cum demat. As the scheme of Transfer cum demat hasbeen discontinued from February 2004, R&TAgent may use this code to reject any requestsgenerated by DPs for Transfer cum demat.

The DP has to inform his client about the rejection if and when the R&T Agent has rejected the

DRF. In such cases the R&T Agent sends the certificates directly to the client.

Subsequent Disputes

Any dispute regarding the title of securities (in physical form) after they have been dematerialised

and credited to a client's account, has to be settled amongst the DPs, clients and Issuer or its R&T

Dematerialisation 62

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Agent. The procedure for dispute settlement is laid down in SEBI Guidelines for Good and Bad

Delivery of documents, as is done in the case of physical securities.

Transposition cum Demat

NSDL has amended its Bye-Laws and Business Rules to enable investors to transpose names of

the joint holders alongwith the process of dematerialisation through their DPs. Prior to this

amendment, investors having shares in joint names (Mr. A & Mr. B), but in different sequence (Mr.

B & Mr. A) were either required to open multiple accounts for each sequence (Mr. A & Mr. B and Mr.

B & Mr. A) or to effect the transposition directly with the Issuer/R&T Agent and then dematerialise

their securities through their DPs.

In case of transposition-cum-dematerialisation, the Client can get securities dematerialised in the

same account if the names appearing on the certificates match with the names in which the account

has been opened but are in a different order. The same may be done by submitting the security

certificates along with the Transposition Form and Dematerialisation Request Form (DRF)

Dematerialisation 63

Figure 21 – Annexure OA of NSDL Business Rules

TRANSPOSITION FORM(for transposition and demat cases)

DateTo,

Name of ParticipantAddress of Participant

We, the undersigned, being the joint holder(s) of securities of (Name of the Company) wish to have ourholdings transposed in the following order in which we have an account with you. We are also submittingthe certificate(s) alongwith DRF for dematerialisation.

Names on the certificate of security:

Name Signature(s)

Details of our client account:

DP Id Client Id Names of the accountholders

Note: Separate Transposition form should be filled by the joint holders for securities having distinctISINs

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Transmission and Dematerialisation of Securities :

In case of death of one or more of the joint holders, the surviving joint holder(s) can get the name(s)

of the deceased removed from the security certificate(s) and get them dematerialised by submitting

the security certificates alongwith the Transmission Form as per Annexure OB (Figure 22) and the

Dematerialisation Request Form (DRF) to the Participant.

Figure 22 - Annexure OB of NSDL Business Rules

FORM FOR TRANSMISSION ALONGWITH DEMATERIALISATIONTo,

Participant's Name, Address & DP id(pre-printed)

Date : __________________

I/We, the undersigned, being the joint holders of the following securities along with Mr./Mrs./Ms.____________________________________ (name of the deceased) wish to have the name of thedeceased deleted from the security certificates. A copy of the death certificate, duly notarised and thedematerialisation request form alongwith the physical certificates are enclosed. I/We request you toprocess the same and advise the Issuer/R & T Agent accordingly. The details are given below:

Client Id

Company Name

Type of SecurityEquity/Others(please specify)

Quantity(in figures)

(in words)

(to be filled -in by the Participant)

ISIN I N

DematerialisationRequest No. (DRN)of the dematerialisationrequest

Instructions :1. Separate forms should be filled up for each ISIN by the survivor(s).2. Each form should be accompanied by a copy of the death certificate, duly notorised.

Sr. Name of the survivor(s) Signature(s)No.

1.

2.

3.

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REMATERIALISATION REQUEST FORM

(pre-printed serial nos.)

PARTICIPANT NAME

DEPOSITORY PARTICIPANT - IDRRN DATE

I/We hereby declare that the below mentioned account may be debited to the extent of my/ourrematerialisation request and equivalent certificates be issued for the same. I/We hereby declare thatthe below mentioned person(s) are the beneficial owners of the securities mentioned.

Account Holder NameAccount No.

No. of Securities to be Rematerialised : (nos.)(in words)Lot Type Requested Market lot / JumboName of the SecurityName of Issuing CompanyFace ValueISIN

Dematerialisation 65

Rematerialisation

Rematerialisation is the exact reverse of dematerialisation. It refers to the process of issuing

physical securities in place of the securities held electronically in book-entry form with a

depository. Under this process, the depository account of a beneficial owner is debited for the

securities sought to be rematerialised and physical certificates for the equivalent number of

securities is/are issued.

A beneficial owner holding securities with a depository has a right to get his electronic holding

converted into physical holding at any time. The beneficial owner desiring to receive physical

security certificates in place of the electronic holding should make a request to the Issuer or its

R&T Agent through his DP in the prescribed Rematerialisation Request Form (RRF).

Figure 23 - Annexure H of NSDL Business Rules

The rematerialisation request is for locked shares Yes/ No

Quantity :

Lock in Reason :

Lock in Release Date (dd-mm-yyyy)

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Address : (to be filled in only if change in address is to be recorded)

Pin

Authorised Signature(s)

Name SignatureFirst/Sole HolderSecond HolderThird Holder

Participant Authorisation

Received the above mentioned securities for rematerialisation from :

Account No.ISINDateAccount No.

Name of the first holder

The application form is verified with the details of the beneficial owner's account and certify that theapplication form is in order. The account has sufficient balances to accept the rematerialisation asrequested. It is also certified that the beneficial owners signatures are verified and found in order. Theother details of the beneficial owners as extracted from the records are enclosed.

Forwarded by : (Seal)

Signature : (Name of the Executive)

(to be printed from the system)

Remat Request No.

Status : Sub - Status : (Occupation) :

Dematerialisation 66

In Case of Individuals

Name(s) in full

First/Sold holder

Second holder

Third holder

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Tax InformationPAN/GIR No. Circle/ward/district

Sole/First Applicant

Second Applicant

Third Applicant

Residential status : Resident / NRI

In Case of NRI Holding

Indian Address

Foreign Address

NationalityRBI Approval No.Bank Account No.

Date

Lock in ReasonLock in Release Date (dd-mm-yyyy)

Acknowledgment

Participant’s Name Address and ID (pre-printed serial no.)

We hereby acknowledge the receipt of a rematerialisation request for no. of shares of (security details) from (Name)

holding a/c no. surrendered on (date) to be delivered in market lots /jumbo lots of certificates .

Participant’s Signature (Seal)

Full Address

Dematerialisation 67

In case of CorporatesName

On receipt of RRF, the DP checks whether sufficient free balance of the securities sought to be

rematerialised is available in the account of the client. If sufficient balance is available, the DP

accepts the RRF and communicates the request to NSDL through the DPM system.

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When NSDL receives the rematerialisation request, it intimates the Issuer or its R&T agent

about such requests. NSDL sends this intimation to R&T agents on a daily basis on the DPM-

SHR system.

DP should forward the RRF to the Issuer or its R&T Agent within seven days of accepting the

RRF from the client. The Issuer or its R&T Agent, after validating the RRF, should confirm to

NSDL that the RRF has been accepted. On receipt of such acceptance from the Issuer or its

R&T Agent, NSDL removes the balances from the respective client's account.

On rematerialisation, R&T Agent issues security certificates as per the specifications given by

the client in the RRF. Thereafter, the Issuer or its R&T Agent despatches the security certificates

for the re-materialised securities to the client and his name is entered in the Register of Members

of the company. The certificate of securities should be sent to the clients within a period of 30

days from receipt of such RRF by the Issuer or its R&T Agent.

The new certificates may not necessarily bear the same folio or distinctive numbers as those

that investor had previously, i.e., prior to his getting them in demat form.

When a rematerialisation request is sent, the securities in the client account will not be available

for delivery/transfer immediately. The client will have to wait for physical certificates to reach

him before they can be sold. Thus the client would encounter temporary illiquidity on the

securities requested for in rematerialised form.

Prerequisite to a Rematerialisation Request1. The beneficial owners of the securities should make the request.

2. There should be sufficient free balance of securities available in the beneficiary account

to honour the rematerialisation request.

Rematerialisation Process1. The DP should provide rematerialisation request forms (RRF) to clients.

2. The client should complete RRF in all respects and submit it to the DP.

3. The DP should check RRF for validity, completeness and correctness. In particular, the

following points should be checked.

• There is sufficient free balance available in the client's account to honour the

rematerialisation request.

• The name of client on RRF is exactly the same as that in the client account.

• In case of joint holding, the order of names appearing on RRF is the same as in the

client's account.

• Details like security type, face value, Issuer's name and lock-in status are filled-in

correctly.

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• The client has indicated his option to receive physical certificates either in jumbo lotfor the entire quantity requested or in market lot.

• Separate RRF are submitted for� free and locked-in securities;� securities locked-in for different reasons;� each ISIN� securities of different paid-up value; and� each client account.

• RRF is signed by� the sole holder in case of single holding;� all joint holders in case of joint holding,� authorised signatories in the case of corporate accounts,� constituted attorney in the case of NRI accounts;

4. If RRF is not found in order, the DP should return the RRF to the client for rectification.5. If RRF is found in order the DP should accept RRF and issue an acknowledgement to the

client.6. DP should enter the rematerialisation request in DPM. DPM will generate a remat request

number (RRN) which should be mentioned on RRF.7. An authorised person, other than one who entered the RRF details in DPM, should verify

the details of RRN and release the request to the depository.8. The DP should complete the authorisation of RRF and forward it to the Issuer or its R&T

Agent for rematerialisation. The DP should forward RRF to the Issuer or its R&T Agentwithin seven days of accepting it from the client.

9. The Issuer or its R&T Agent should verify the RRF for validity, completeness andcorrectness. It should also match the details with the intimation received from the depositoryagainst the same RRN.

10. In case the Issuer or its R&T Agent finds RRF in order, it should confirm the remat requestThe Issuer or its R&T Agent should then proceed to issue the physical security certificatesand despatch them to the beneficial owner.

11. In case RRF is not found to be in order, the Issuer or its R&T Agent sends an objectionmemo to the DP, with or without RRF, depending upon the reason for rejection. RRFs aresent back on the following grounds:� Incomplete or incorrect RRF� RRF details mismatch� RRF not received by registrar� Rejected due to ACA

12. The DP, on receiving confirmation of debit entry in DPM, should inform the client accordingly.

The entire process takes a maximum of 30 days. No trading is possible on the securities sentfor rematerialisation.

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CHAPTER 11

Trading and Settlement

One of the basic services provided by NSDL is to facilitate transfer of securities from oneaccount to another at the instruction of the account holder. In NSDL depository system bothtransferor and transferee have to give instructions to its depository participants [DPs] fordelivering [transferring out] and receiving of securities. However, transferee can give 'StandingInstructions' [SI] to its DP for receiving in securities. If SI is not given, transferee has to giveseparate instructions each time securities have to be received.

Transfer of securities from one account to another may be done for any of the following purposes:a. Transfer due to a transaction done on a person to person basis is called 'off-market' transaction.b. Transfer arising out of a transaction done on a stock exchange.c. Transfer arising out of transmission and account closure.

A beneficiary account can be debited only if the beneficial owner has given 'Delivery Instruction'[DI] in the prescribed form. [Figure 24 / 25] Participants may use the old format as well as thenew format for Delivery Instructions by Clients. Separate forms have to be used for transferringsecurities within NSDL and between depositories.

Figure 24 - Annexure L of NSDL Business Rules

Trading and Settlement 70

New Format

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Participant Name, Address & DP Id(Pre-printed) RECEIPT INSTRUCTIONS

Serial No. (Pre-printed)Client Id (Pre-stamped) Date :

I/We hereby request you to credit my/our account as per the following details:

CM-BP-IdCM Name

(To be filled in if Deliverer is aClearing Member)

I N

ISIN Security Name Quantity Instruction No.(In Figures) (to be filled by DP)

Execution Date :

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: 1. To be submitted in duplicate for acknowledgement.2. In case of joint holdings, all holders must sign.

Figure 26 - Annexure M of NSDL Business Rules

Market Type

Settlement No. I N

DP-IdDP NameClient Id

I N

(To be filled in for Market Trades)(To be filled in if Deliverer is a

Client)

Trading and Settlement 71

Participant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)Client Id ( Pre-stamped) Date :

I/We hereby request you to debit my /our account as per the following details :(Fill up the relevant box and strike off whichever is not applicable)

CM-BP-IdCM NameMarket TypeSettlement No.

For Market Trades (Receiver Details)DP-IdDP Name

Client Id

For Off-Market Trades (Receiver Details)

I N I N

ISIN Security Name Quantity Quantity Instruction No.(In Figures) (In Words) (to be filled by DP)

Execution Date :

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: 1. To be submitted in duplicate for acknowledgement.2. In case of joint holdings, all joint holders must sign.

DELIVERY INSTRUCTIONS BY CLIENTS

Figure 25 - Annexure L of NSDL Business RulesOld Format

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Off - Market Trade

Buyer Seller

DP2

NSDL

DP1

1

1

2

2 3

3

3

3

Figure 27

1. Seller gives delivery instructions to his DP to move securities from his account to thebuyer's account.

2. Buyer automatically receives the credit of the securities into his account on the basis ofstanding instruction for credits.

3. Buyer receives credit of securities into his account only if he gives receipt instructions, ifstanding instructions have not been given.

4. DP needs to be extra careful in verifying the signature of the client if large quantities ofsecurities are being debited to the account.

5. Funds move from buyer to seller outside the NSDL system.

The DI for an off-market trade or for a market trade has to be clearly indicated in the form bymarking appropriately. The form should be complete in all respects. All the holder(s) of the accounthave to sign the form. If the debit has to be effected on a particular date in future, account holdermay mention such date in the space provided for 'execution date' in the form.

This chapter deals with settlement of off-market trade and market transfer for instructions receivedin the prescribed form as given above. Transfers arising out of transmission and account closureare discussed under the chapter on transmission and account opening respectively.

Settlement of Off-Market Transactions :

Any trade that is cleared and settled without the participation of a clearing corporation is called off-market trade, i.e., transfer from one beneficiary account to another due to a trade between them.Large deals between institution, trades among private parties, transfer of securities between a clientand a sub-broker, large trades in debt instruments are normally settled through off-market route.

The transferor will submit a DI with 'off-market trade' ticked off to initiate an off-market debit. Theaccount holder is required to specify the date on which instruction should be executed by mentioningthe execution date on the instruction. The debit will be effected on the execution date. DP will enterthe instruction in the DPM if the instruction form is complete in all respects and is found to be inorder. DPM will generate an 'instruction number' for each instruction entered. DP will write theinstruction number on the instruction slip for future reference.

Trading and Settlement 72

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Market Settlement-Demat Shares

CC

Broker Broker

SELLER SELLER BUYERBUYER

NSDL

DP DP

1

1

2

2

3

4

4

The instruction will be triggered on the execution date. If there is adequate balance in the account,such quantity will be debited on the execution date. If adequate balances do not exist in the account,then instruction will wait for adequate balances till the end of the execution day. The account will bedebited immediately on receipt of adequate balances in the account. If adequate balances are notreceived till the end of the day of the execution date, the instruction will fail.

Transferee will receive securities into the account automatically if SI were given to the DP at thetime of account opening. If SI is not given, transferee has to submit duly filled in 'Receipt-Instruction'[RI] form for every expected receipt. Exchange of money for the off-market transactions are handledoutside the depository system

Settlement of Market-Transaction :

Figure 28

Trading and Settlement 73

A market trade is one that is settled through participation of a Clearing Corporation. In thedepository environment, the securities move through account transfer. Once the trade is executedby the broker on the stock exchange, the seller gives a delivery instruction to his DP to transfersecurities to his broker's account.

The broker has to then complete the pay-in before the deadline prescribed by the stock exchange.The broker removes securities from his account to CC/CH of the stock exchange concerned,before the deadline given by the stock exchange.

The CC/CH gives pay-out and securities are transferred to the buying broker's account. Thebroker then gives delivery instructions to his DP to transfer securities to the buyer's account.The movement of funds takes place outside the NSDL system.

1. Seller gives delivery instructions to his DP to move securities from his account to his broker'saccount.

2. Securities are transferred from broker's account to CC on the basis of a delivery outinstruction.

3. On pay-out, securities are moved from CC to buying broker's account.4. Buying broker gives instructions and securities move to the buyer's account.

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Trading and Settlement 74

Transfer of securities towards settlement of transactions done on a stock exchange is called

settlement of market transaction. This type of settlement is done by transferring securities

from a beneficiary account to a clearing member account.

Brokers of stock exchanges that offer settlement through depository are required to open a

'clearing member account'. In addition to the brokers, custodians registered with SEBI and

approved by stock exchanges can open a clearing member account. These accounts are

popularly known as 'Broker settlement account'. A client who has sold shares will deliver

securities into the settlement account of the broker through whom securities were sold.

The following are important descriptions of a transaction done on a stock exchange. All these

descriptions have to be written in the 'DI' slip.

Market Type

Stock exchanges offer different market segments in which trades can be done. The segmentation

is done by the type of settlement or type of trade.

Each of the segments is denoted as 'market type' in NSDL depository system. The stock

exchange which offers these market types, generally, recognize these settlements with a two

character code. The DI slip should contain the market type for which securities are being

transferred to the clearing member. The contract note/trade confirmation slip given by the broker/

sub-broker will indicate the market type.

Settlement Number

Trading periods of each of the market segments is identified by a settlement number. Every

settlement number has a trade beginning day, trade-ending day, settlement pay-in day and

settlement pay-out day. Stock exchanges divide a period of one year [generally calendar year]

into several settlement periods and allocate settlement number for each settlement-period. All

these days collectively are called 'settlement calendar'. DPM system will give complete details

of settlement calendar for each stock exchange. The DI slip should contain the settlement

number for which the securities are being transferred to the clearing member.

Clearing Member

Every broker in a stock exchange offering settlement in dematerialised securities will have to

open a distinct account called 'clearing member account'. It is identified with a number called

'CM-BP-ID'. If a broker deals in more than one stock exchange, he will be allotted one CM-BP-

ID per stock exchange. The DI slip should contain the CM-BP-ID relevant to the stock exchange

in which the trade was done.

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Trading and Settlement 75

Delivery Deadline

Stock exchanges set a deadline time by which clearing member are expected to deliver securities.

Clearing member can deliver securities within the deadline time only if they have received securities

from their clients. In order to ensure that clients give securities in time to the clearing member, SEBI

has prescribed deadline time by which clients have to give securities to clearing members. SEBI

has advised DPs to instruct their clients to submit the settlement instructions on T+1 (in physical

form upto 4 p.m. and 6 p.m. in case of electronic instructions) for pay-in of securities, viz.; instructions

to transfer securities from Client account to CM Pool account, Inter-Settlement Instructions, CM

Pool to CM Pool account transfers and Delivery-Out Instructions, etc. For example, pay-in for

trades executed on 'Monday' will be on Wednesday. Hence, Clients will have to submit instructions

to their Participants (upto 4 p.m. in case of physical and upto 6 p.m. in case of electronic instructions)

on Tuesday. The client must submit the delivery instruction slip to its Depository Participant before

the DPs acceptance deadline.

Steps in Pay-in and Pay-out :

Figure 29 - Annexure S of NSDL Business RulesParticipant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)

Client Id (Pre-stamped) Date :

I/We request you to debit my/our CM account as per the following details:

Name of ClearingCorporation

Instruction Type � Reversible � Irreversible (Please tick in only one of the boxes as may be applicable)

Market Type :

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions:1. To be submitted in duplicate for acknowledgement2. Irreversible delivery-out instructions are instructions which cannot be cancelled once effected.3. Use separate forms for reversible delivery-out instructions and irreversible delivery-out instructions.4. In case it is not explicitly mentioned that it is an irreversible delivery-out instruction, it will be assumed to be a

reversible delivery-out instruction

DELIVERY-OUT INSTRUCTIONS BY CLEARING MEMBERS FOR PAY-IN

ISIN Security Name Quantity Quantity Instruction No.(In Figures) (In Words) (to be filled by DP)

Execution Date : Settlement No. :

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Trading and Settlement 76

The process of a broker [CM] submitting securities being towards the securities sold by him on

behalf of his client, to CC/CH of a stock exchange is called 'pay-in'. All CM's are expected to

complete the pay-in before the deadline time prescribed by the stock exchange. In a depository

environment, the following steps have to be completed to execute the 'pay-in' successfully :-

– The clients of the brokers who have sold securities will move the securities to the broker-

settlement account before the deadline time.

– CM will move securities from his account to CC/CH of the stock exchange concerned,

before the deadline time given by the stock exchange. If the CM is unable to give delivery

within the time, the shortage is purchased by the CC/CH in an open auction and the

difference in price will be collected from the CM.

The process of a CC/CH transferring the securities to the broker's settlement-account for the

quantity of securities purchased by them on behalf of their clients is known as 'pay-out'. Pay-

out time is also pre-determined by the settlement calendar. The following steps are taken to

distribute securities received in pay-out to buying clients:-

– The CC/CH credits the buying CM account immediately on pay-out.

– The CM/broker will transfer securities from his CM Settlement account to the accounts of

the buyer.

– If the buying client is a sub-broker, such sub-broker will transfer securities to the final

client using the off-market route.

Figure 30 - Annexure T of NSDL Business RulesParticipant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)

Client Id (Pre-stamped) Date :

I/We hereby request you to debit my/our CM account as per the following details of the receiving clients:

Market Type :

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: To be submitted in duplicate for acknowledgement

DELIVERY INSTRUCTIONS BY CLEARING MEMBERS ON PAY-OUT

Client Id Client DP Id DP Name ISIN Security Quantity Quantity InstructionName Name (In Figures) (In Words) No. (To

be filledby DP)

Execution Date : Settlement No. :

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Trading and Settlement 77

Participant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)Client Id ( Pre-stamped) Date :

I/We hereby request you to move securities in my/our account as per the following details:

Market Type

Settlement No.

From

ISIN Security Name Quantity Quantity Instruction No.(In Figures) (In Words) (to be filled by DP)

Name of Clearing Corporation :

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: To be submitted in duplicate for acknowledgement.

INTER-SETTLEMENT INSTRUCTIONS

Market Type

Settlement No.

To

Execution Date :

Inter-Settlement Transfers

Figure 31 - Annexure SS of NSDL Business Rules

In a clearing member account, the securities are always kept in a bucket of specific market

type and settlement number. The clearing member may have to move securities from one

bucket with a different market type-settlement number combination to another bucket from

where pay-in is to be effected. To effect this movement a clearing member can give an instruction

to move securities from one settlement to another settlement which is called 'inter-settlement'.

Tracking of securities received for pay-inA CM is required to track the securities, which it has received for pay-in. A CM can obtain such

information from the following sources:

1. Its clients : CM may contact selling clients to inquire whether they have delivered securities.

2. Its DP: CM may contact its DP to find out the deliveries received into its CM settlement

account.

3. Internet - using SPEED-e website of NSDL.

NSDL offers a secured Internet based service for clearing members [such as brokers] of stock

Direct Delivery by Clearing Corporation to Client Account

Direct delivery of securities to the clients can also be effected by the Clearing Corporation,

subject to completion of necessary procedures.

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Trading and Settlement 78

exchanges linked to NSDL. This service named Internet-based Demat Account Statement

[IDeAS] enables the clearing members to view details of their clearing member settlement

accounts directly on the Internet. Data available include:

- Balance lying in CM settlement account

- Transactions for securities delivered by the client [for pay-in]

- Transactions for securities delivered by the CM to CC [pay-in]

- Transactions for securities delivered by CC to CM [pay-out]

- Transactions for securities delivered by CM to clients [after pay-out]

Details of all settlements for which pay-in had taken place in last 4 days and for which pay-in is

scheduled in next 4 days and current day is available. Data is updated online with a maximum

delay of half an hour.

All the above data can be downloaded and input in CM's back office for further use. This

facility is of immense help to the CM as the downloaded data can be applied in their back office

system to automatically flag the clients who are yet to deliver the securities for pay-in. This will

enable them to follow-up with such clients for pending deliveries.

Automatic Delivery-out(1) Delivery-out instructions for moving securities from CM Settlement Account to CM Delivery

Account can be generated automatically by the respective Clearing Corporations based on

the net delivery obligations of its Clearing Members. The Clearing Corporation can generate

Auto DOs on behalf of those Clearing Members who have authorized it in this regard. The

Auto DOs will be generated around the time of download of the delivery obligations to the

Clearing Members. Such Clearing Members will not be required to give delivery-out instruction

forms to the Participants for Pay-in to the Clearing Corporation in respect of the automatically

generated DOs. The Clearing Members can know the Auto DOs either by way of downloads

from the Clearing Corporation or through the Auto DO Report from the Participants or from

IDeAS facility on Internet.

(2) Auto DOs will not be generated in the following cases and the Clearing Members will have to

give Delivery-out Instruction forms to their Participants as usual :

(a) Non Pari-Passu shares or multiple ISINs - The Auto DOs will be generated only for

the main ISIN. Example: A Clearing Member has to deliver 1000 shares of L & T for

Pay-in. If he has 600 shares under ISIN INE018A01014 and 400 shares under ISIN

INE018A01022 i.e. L & T (LE), the Auto DO will be generated for the entire 1000

shares under ISIN INE018A01014. In respect of the 400 shares lying under ISIN

INE018A01022, the Clearing Member will have to give Delivery-out Instruction form

to the Participant. If the Clearing Member wants to deliver shares under an ISIN

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different from the one for which Auto DO is generated, then he has to cancel the Auto

DO and give Delivery-out Instruction form to the Participant for the ISIN he wants to

deliver.

(b) Irreversible Delivery-out (IDO) - Auto DOs will not be generated for IDOs required to

be given for the purpose of margin payment / exemption, etc.

(i) In case IDO is given before generation of Auto DO, Clearing Members will have

to ensure that an instruction is given to the Participant subsequently for

cancellation of the corresponding Auto DO alongwith Delivery-out Instruction

form for the balance quantity.

(ii) In case IDO is given after generation of Auto DO, Clearing Members will have

to ensure that the Auto DO is first cancelled before execution of the IDO. Further,

a Delivery-out Instruction form for the balance quantity should also be given to

the Participant.

(c) Shifting of CM Settlement Account from one Participant to another Participant - Auto

DOs will be generated only in respect of one CM Settlement Account i.e., the CM

Settlement Account which is designated for receiving pay-out as of the date of

generation of Auto DOs. The Clearing Member must carefully monitor the delivery

instructions for Pay-in as the securities might be lying during the shifting process in

both the CM Settlement Accounts.

(3) Clearing Members will be required to give Inter-settlement Instructions to the Participants

for securities lying in another settlement as usual.

(4) Participants can generate separate reports from the DPM both for Auto DOs and manual

DOs.

(5) All the existing features of DOs viz.; remaining valid till the NSDL Deadline time and

partial delivery for insufficient balance will be applicable for Auto DOs also.

CM Settlement to CM Settlement instructions :-

The CM may give instructions to its participant to debit its settlement account and credit the

settlement account of another CM in a prescribed format. The CM may give receipt instructions

to its participants for crediting its settlement account from settlement account of another CM in

the format laid down. Alternatively, a CM may give standing instruction to its participant to

credit its settlement account. The participant shall ensure that the instruction form is complete

and the signature of the CM is valid. The participant shall execute the instructions of the CM to

debit/credit the settlement account of the CM.

Trading and Settlement 79

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Trading and Settlement 80

Participant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)

Client Id (Pre-stamped) Date :

I/We hereby request you to debit my/our account as per the following details:

Market Type

Settlement No.

From

ISIN Security Name Quantity Quantity Instruction No.(In Figures) (In Words) (to be filled

by DP)

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: To be submitted in duplicate for acknowledgement.

CM POOL TO CM POOL DELIVERY INSTRUCTIONS BY CLEARING MEMBERS

Execution Date :

Market Type

Settlement No.

CM-BP-Id

To

Figure 32 - Annexure ST of NSDL Business Rules

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Trading and Settlement 81

Participant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)

Client Id (Pre-stamped) Date :

I/We hereby request you to credit my/our account as per the following details:

Market Type

Settlement No.

From

ISIN Security Name Quantity Quantity Instruction No.(In Figures) (In Words) (to be filled

by DP)

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: To be submitted in duplicate for acknowledgement.

CM POOL TO CM POOL RECEIPT INSTRUCTIONS BY CLEARING MEMBERS

Execution Date :

Market Type

Settlement No.

CM-BP-Id

To

Figure 33 - Annexure SU of NSDL Business Rules

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Trading and Settlement 82

Inter-depository transfer :-

Transfer of securities from an account in one depository to an account in another depository is

termed as an inter-depository transfer. This facility is quite similar to account transfers within

NSDL.

• As per SEBI (Depositories and Participants) Regulations, 1996, both the depositories must

be inter-connected to enable inter-depository transfers.

• It can be done only for securities that are available for dematerialisation on both the

depositories.

• The account in NSDL can be either a clearing account or a beneficiary account.

• For debiting the clearing account or the beneficiary account with NSDL, the form for "Inter-

depository delivery instruction" is required to be submitted by the clearing member/

beneficial owner to its DP.

• For crediting the clearing account or the beneficiary account, the standing instruction

given for automatically crediting the account is applicable. In case the standing instructions

are not given, then the form for "Inter-Depository Receipt Instruction" is required to be

submitted by the clearing member/beneficial owner to its DP.

• Inter Depository Transfer instructions for the day are exchanged online between the two

depositories.

• The deadline time for DPs to verify & release Inter Depository Transfer delivery/ receipt

instructions is 6 p.m. on weekdays and 2.30 p.m. on Saturdays.

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Trading and Settlement 83

Participant Name, Address & DP Id

(Pre-printed)

Serial No. (Pre-printed)Client Id (Pre-stamped) Date :

I/We hereby request you to debit my/our account as per the following details:

Market Type: (To be filled if the deliverer is a Clearing Member)

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: To be submitted in duplicate for acknowledgement.

INTER-DEPOSITORY DELIVERY INSTRUCTIONS

Execution Date :

Settlement

No.

Target Depository-Id :

Target Client-Id Target SettlementDetails

ISIN Security NameQuantity

(In Figures)Quantity

(In Words)

Instruction No.(To be filled by

DP)

Figure 34 - Annexure N of NSDL Business Rules

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Trading and Settlement 84

Figure 35 - Annexure NA of NSDL Business Rules

Participant Name, Address & DP Id(Pre-printed)

Serial No. (Pre-printed)

Client Id (Pre-stamped) Date :

I/We hereby request you to Credit my/our account as per the following details:

Market Type: (To be filled if the deliverer is a Clearing Member)

Participant Stamp, Date & Time Authorised Signatory(ies)

Instructions: To be submitted in duplicate for acknowledgement.

INTER-DEPOSITORY RECEIPT INSTRUCTIONS

Execution Date :

Settlement

No.

Target Depository-Id :

Target Client-Id Target SettlementDetails

ISIN Security NameQuantity

(In Figures)Quantity

(In Words)

Instruction No.(To be filled by

DP)

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Trading and Settlement 85

Figure 36

Check List for Settlement

� Verify signature.

� Ensure strict adherence to submission of instructions within pre-defined settlement

deadlines.

� Advise and ensure that all clients (if joint holders) sign instruction. Only in case of CM

a/c the facility of either one or all joint holders is permitted.

� Verify all fields in instruction form.

� Accept delivery instructions on T+1 (in physical form upto 4 p.m. and 6 p.m. in case of

electronic instructions) for pay-in of securities.

� Check RBI approval in case of NRI transactions.

� In case of natural guardian, no court approval is needed for movement of securities

from the account held in name of the minor.

SPEED-e

Depository transactions are time-critical. Any lapse or failure to deliver securities before the

stipulated time may result in financial losses. With the shortening of settlement cycle, time

available with the investors to submit instructions to their DPs has reduced considerably. This

problem is even more severe if investors staying at far-off locations are required to submit

these instructions at the offices of DPs. To help investors submit their instructions conveniently,

NSDL has set up an Internet based service called SPEED-e, thus eliminating the geographical

barrier.

Demat account holders (including brokers) can submit delivery instructions to their Depository

Participants (DPs) electronically, thus eliminating the need to submit instructions in paper form.

The facility features high level of security (128 bit SSL) for server authentication and data

encryption. The instructions submitted by the account holders are digitally signed. SPEED-e

allows both interactive and batch file based operation with digital signature. Thus data entered

by the account holder is received into the depository participants system and executed. As the

instruction is reconfirmed by the client under client's verifiable authority, depository participant

acts on it directly without any modifications in the instructions.

Features of SPEED-e

� Submission of delivery instructions

� View status of execution of instructions

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� Submission of instructions to freeze / unfreeze account(s) / ISIN(s) and / or specific quantity

of securities under an ISIN (for Smart Card Clients only)

� Operation of a Joint account by any / all account holders jointly using multiple authorisation

facility (for Smart Card Users only)

Types of Users

Services under SPEED-e are available to Clients as well as CMs whose DPs have subscribed

to SPEED-e. Clients/CMs who are desirous of using these services will be required to register

as a 'User'. There are two types of Users viz., Password Users and Smart Card Users.

Password Users: Password Users are Clients who are allowed to submit delivery instructions

only in favour of a maximum of three pre-notified CM accounts.

Smart Card Users: SPEED-e offers a number of additional features and higher level of security

to Smart Card Users. Smart Card Users (Clients and CMs) can submit both market and off-

market instructions. Clients who are Smart Card Users can freeze / unfreeze their account(s)

/ ISIN(s) and / or specific quantity of securities under an ISIN. Freeze request executed by

Clients through SPEED-e cannot be unfrozen by the DP. Further, in case of joint accounts, any

/ all joint holders can operate the account using multiple authorisation facility.

IDeAS (Internet-based Demat Account Statement)

NSDL launched its first Internet-based initiative, SPEED (Securities Position Easy Electronic

Dissemination), in February 2000 now called IDeAS (Internet-based Demat Account Statement).

This facility is available on SPEED-e website for viewing balances and transactions in demat

accounts. It is available to the Users of SPEED-e, Clearing Members who have subscribed to

IDeAS and to those clients whose Participants are registered for IDeAS. The information

(balances and transactions) are updated on an online basis with a delay of maximum 30 minutes.

Features of IDeAS

� Clients (Beneficial Owners):

Clients can view the latest balances and transactions that have taken place in the last five days

in their depository accounts. Print-out of the screen can also be taken. Clients can also download

the transaction statement on a monthly basis. The transaction statements of a particular month

are available latest by 7th of the following month and can be downloaded till the details of the

following month are uploaded to IDeAS.

Trading and Settlement 86

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� Clearing Members (CMs)

CMs can view and download the latest balances and transactions in their pool accounts in

respect of settlements for the current pay-in date, previous four and next four pay-in dates.

Other features:

a) View ISIN-wise positions / transactions for a given market type and settlement number.

b) View Delivery-out instructions, which are in 'overdue' status, for a given market type and

settlement number.

c) Download transactions in the Pool Account and import into back-office system to determine

shortages for follow-up with Clients.

d) Download ISIN master to keep the back-office system up-to-date.

Securities Trading Information Easy Access and Delivery (STEADY)

Using the infrastructure of SPEED-e, NSDL has developed its third Internet-based application,

STEADY (Securities Trading Information Easy Access and Delivery), which is a means of

transmission of trade information electronically across market participants.

STEADY will enable electronic communication between brokers, custodians and fund managers

in respect of Custodian trades. In order to use the STEADY facility, brokers, custodians and

fund managers will have to access STEADY website on Internet with smart card, bearing digital

signature certificate issued by licensed Certifying Authority (CA), approved by NSDL. Further

all batches and uploads from brokers / custodians / fund managers will be digitally signed by

the respective users and will be accepted by STEADY only after successful verification of

digital signature. Also all downloads obtained by brokers / custodians / fund managers will bear

the digital signature of STEADY site.

For Custodian Trades: STEADY will enable brokers to submit batch of contract notes alongwith

trade details in a pre-defined fixed file / ISO formats. Once the batches are uploaded, custodians

will be able to download the contract note alongwith trade details in ISO 15022 message format

MT 515 for processing in their back office (These messages will bear NSDL's digital signature).

At their back office, custodians will carry out the matching process and periodically upload the

Contract note Status Changes (CSC) (MT-548) to the system through STEADY. Brokers will be

able to view the CSC and download the Contract Note Status (CNS) to their back office. CSC

will be in a pre-defined fixed file or ISO format as the case may be. The custodians will upload

the CSC file only when there is change in status of the contract note or in the event of contract

note remaining in pending status.

Trading and Settlement 87

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For Domestic Trades: STEADY will enable brokers to submit batch of contract notes alongwith

trade details in a pre-defined fixed file / ISO format. Once the batches are uploaded, fund

managers will be able to download the contract notes in fixed file or ISO format as the case

may be, for processing in their back office

At their back office, fund managers will carry out the matching process and periodically upload

the Contract note Status Changes (CSC) (MT-598) to be used by brokers through STEADY.

Custodian will be able to download contract note MT-515 which are matched by fund manager.

The contract notes can also be viewed online. Fund Managers will be able to upload instructions

to custodians as a settlement advice. Custodians will be able to download these instructions in

ISO 15022 message format MT 54X for processing in their back office.

Trading and Settlement 88

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Salient points of the NSDL-Depository Operations Module

1. The test is of 75 minutes duration.

2. The total marks for the examination are 100.

3. Each participant should secure a minimum of 60% of the marks to be eligible to receivethe certificate in NSDL - Depository Operations Module.

4. Thus a participant should secure a minimum of 60 marks out of total 100 to pass the test.

5. A participant should secure a minimum of 80% of the marks to be a certified trainer.

6. Thus a participant should secure a minimum of 80 marks out of total 100 to be certifiedas a trainer.

LIST OF TEST CENTRES TO APPEAR FOR NCFM EXAMINATION

TEST TEST CENTRE TELEPHONE ANDCENTRE FAX NUMBERSCODES

1 National Stock Exchange of India Ltd. Tel : 022 - 26598252”Exchange Plaza”, 022 - 26598100 - 114Bandra Kurla Complex, Fax : 022 - 26598393Bandra (East), Mumbai-400051

2 National Stock Exchange of India Ltd. Tel : 011-23344313-27”Thapar House”, Western Wing Fax : 011-23366658Mezzanine Floor, Janpath Lane124, Janpath, New Delhi – 110 001

3 National Stock Exchange of India Ltd. Tel : (033) 24631802-1805,1st Floor, Park View Apartments 24631809-1812 (Board Nos)99, Rash Behari Avenue Fax : (033) 24631791,Kolkata – 700 029 24631806

4 National Stock Exchange of India Ltd. Tel : 044-284751007th Floor, Arihant Nitco Park Fax : 044-2847363390, Dr.Rashakrishnan SalaiMylapore, Chennai - 600 004

5 National Stock Exchange of India Ltd. Tel : 040-23227084/5H No.3-6-322 Fax : 040-23227086Mahavir House, IInd FloorChamber no.203 & 204Basheerbagh, Hyderabad : 500029

6 National Stock Exchange of India Ltd. Tel : 079-26580212 - 13406 Sakar II Fax : 079-26576123Near Ellis BridgeAhmedabad – 380 006

7 Any other place (depending on demand)

Additional information on the NCFM programme can also be obtained at NSE'sweb-site: www.nse-india.com or by e-mailing at [email protected].